Chinese cities cut mortgage rates for first-time buyers to lowest since 2019 in bid to revive property market
- The average mortgage rate for a first home in 103 cities fell to 4.04 per cent in February, according to the Beike Research Institute
- The biggest drop came from second-tier cities, which on average cut their rate by 8 basis points to 3.99 per cent
The average mortgage rate for a first-time buyer in 103 mainland Chinese cities fell to 4.04 per cent in February, the lowest level since 2019, according to the Beike Research Institute.
The 4.1 per cent rate is a key level regarded as very low in China, 20 basis points below the five-year loan prime rate (LPR) fixed by the People’s Bank of China since August 2021. On Monday, the central bank left the five-year LPR, a reference rate for mortgages, unchanged at 4.3 per cent.
The biggest drop came from second-tier cities, which on average cut their rate by 8 basis points from a month ago to 3.99 per cent.
The interest rate for first homes in first-tier cities like Beijing, Shanghai and Shenzhen remained high at 4.6 per cent, unchanged from a month ago. Those buying a second home in those cities bear a higher rate of 5.13 per cent.
Around 40 per cent of the second-tier cities Beike monitors now offer a rate below 4.1 per cent. Nanning, the capital of the Guangxi region and Zhuhai in southern Guangdong province, offer the country’s best rate, at 3.7 per cent in February, down 40 basis points from a month ago.
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Banks are also working faster to deliver loans to homebuyers, who on average waited 28 days this month, three days less than a month ago.
“Low interest rates and fast loan delivery help lower the cost of buying a home and speed up the process, which will support the recovery of the property market,” Beike wrote in the report.