A view of the PBC building in Beijing on August 22, 2022 Photo: VCG

China’s benchmark lending rates remained unchanged for a third straight month on Monday as widely expected, based on unchanged medium-term lending facility (MLF) rates in November. The rates still has room for adjustment by the year end amid a patchy real estate market that requires stimulus, analyst said. 

The one-year loan prime rate (LPR) came in at 3.65 percent on Monday, unchanged from the previous month. The five-year LPR, on which many lenders base their mortgage rates, also remained unchanged from the previous reading of 4.3 percent, data from the National Interbank Funding Center showed on Monday.

By the end of the year, the five-year LPR still has some wiggle room of around 20 basis points for downward adjustment, according to a forecast by Wang Qing, chief macro analyst at Golden Credit Rating. He said that the adjustment, should it materialize, will become the most effective driver in supporting market demand for housing loans.

The People’s Bank of China (PBC), the country’s central bank, and the China Banking and Insurance Regulatory Commission (CBIRC) emphasized in a joint meeting on Monday that financing in the real estate sector should remain stable and orderly, development loans for housing developers and construction enterprises should be placed steadily, and reasonable demand for individual housing loans should be supported, releasing more pro-growth signals to aid the recovery of the sector.

Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Monday that the meeting clarified the idea of credit work for the remainder of the year and the first half of 2023, that is credit should be viewed from the perspective of stabilizing the economy, especially in terms of stimulating consumption growth and guaranteeing living standards.

The downward spiral across the real estate market has not yet abated. China’s property sector investment fell at an accelerated pace in the first 10 months this year, dropping 8.8 percent year-on-year, compared with the 8-percent decline in the first nine months of 2022, data from National Bureau of Statistics (NBS) showed on November 15.

Recently, the PBC and CBIRC released a notice, detailing 16 measures to ensure stable and healthy development of the real estate sector.

Multiple local governments have implemented targeted policies to ensure housing settlement and promoting the stable development of the sector.

Data from the Beike Research Institute showed that mainstream first-home loan interest rate in 103 Chinese cities monitored by the agency was 4.09 percent in November, a decrease of 3 basis points from October, and the second-home loan interest rate was 4.91 percent, which was almost unchanged from the previous month.

Global Times