A real estate agent (right) tells visitors about a residential development Saturday at the Shanghai Real Estate Expo, which ran until Saturday at the Shanghai Exhibition Center. Shanghai's property market remained quiet during the Labor Day holiday as many buyers held a wait and see attitude, according to a report on Shanghai Television Station Saturday. Photo: Yang Hui/GT

 

Commercial banks in multiple Chinese cities have moved to cut mortgage rates for house purchases, after the People's Bank of China (PBC), China's central bank, lowered its benchmark lending rates last week, in a move that experts say could boost real estate sales after weak demand last year.

One employee from a branch of Bank of Communications in Shanghai told the Global Times on Monday that the bank has cut rates for first-time home buyers by 5 basis points (bps) to 4.65 percent. 

The bank also reduced the rate for second homes to 5.2 percent, also down by 5 bps.

"It's hard to say if the mortgage rate would change further in the short term. Maybe it will, along with loan prime rate (LPR) changes," the person said. 

A staffer at the Industrial and Commercial Bank of China (ICBC) in Shanghai said the bank offers 4.95-percent mortgages for first-time home buyers, also down 5 bps.

In Beijing, ICBC's rate for first-time buyers is 5.15 percent, down 5 bps, a Beijing-based ICBC personal credit manager told the Global Times on Monday.

The banks lowered their rates, mostly by 5 bps, after the PBC cut the one-year LPR rate by 10 bps to 3.7 percent on January 20. In December, the PBC cut the one-year LPR by 5 bps, the first time since April 10. 

The PBC also lowered the five-year LPR by 5 bps to 4.6 percent this month, a move that experts said would benefit the real estate sector, which has been suffering from tight liquidity and weak demand. 

"Lowering of the five-year LPR is a strong signal by the government that it intends to stabilize the property market. It can also be taken as a signal that the property market has hit bottom and will start to bounce back," Zhou Maohua, an analyst at Everbright Bank, told the Global Times. 

As banks gradually reduce mortgage rates following the PBC's move, experts see a rebound of home buying this year, as both consumers and companies have lower costs for purchasing homes or investing in their construction.

Yan Yuejin, a property market veteran, said it isn't likely that China's house prices will continue to fall this year. He predicted that transactions could rise, though by less than 5 percent, this year. 

Global Times