A few days ago, my country’s one-year and five-year loan market quotation rates (LPR) have both been lowered. Experts pointed out that on the one hand, the reduction of LPR will help reduce the financing cost of enterprises and boost the confidence of market players. On the other hand, it will also help stabilize the real estate industry. industry, reduce the housing loan burden of residents, and promote consumption.
A resident in Guangzhou checks the model of a building before purchasing an apartment. [Photo provided to China Daily]
The reduction in China’s benchmark lending rates on Monday will boost the nation’s economic recovery by spurring corporate and household spending and stabilizing the real estate sector, experts said.
Experts said that my country’s reduction of benchmark lending rates on August 22 will help stimulate business and household spending, stabilize the real estate industry, and thus promote my country’s economic recovery.
China’s over-five-year loan prime rate (LPR) dropped to 4.3 percent in August from 4.45 percent in July and marking the lowest level since the rate debuted in August 2019, the National Interbank Funding Center said on Monday.
The National Interbank Funding Center announced on August 22 that my country’s market quotation rate (LPR) for loans with a maturity of more than five years was lowered to 4.30% in August from 4.45% in the previous month. This is since the launch of the new LPR quotation method in August 2019. the lowest level.
The one-year LPR also decreased on Monday, to 3.65 percent from 3.7 percent a month earlier, the center said.
The one-year LPR was also lowered to 3.65% on the same day, from 3.70% in the previous month.
“The reductions will play a positive role in reducing financing costs for the real economy, improving the confidence of market players and promoting the recovery of credit demand,” said Wen Bin, chief economist at China Minsheng Bank.
Wen Bin, chief economist of China Minsheng Bank, explained: “This move will play a positive role in reducing the financing cost of the real economy, boosting the confidence of market players, and promoting the recovery of effective demand for credit.”
The marked reduction in the over-five-year LPR will help the real estate sector stabilize by unleashing housing demand and boost consumer spending by reducing household debt burdens, he said.
He pointed out that the sharp reduction of the LPR for a period of more than five years will help to release the demand for housing purchases, stabilize the real estate industry, and also help reduce household debt burdens and promote household consumption.
Meanwhile, the lowered one-year LPR will further bring down companies’ financing costs and drive up the country’s growth in fixed-asset investment, Wen said.
Wen Bin also said that the one-year LPR reduction will help further reduce corporate financing costs and boost fixed asset investment growth.
An executive meeting of the State Council, China’s Cabinet, on Thursday called for efforts to lower the financing burdens on businesses and consumption credit costs for individuals in order to ramp up financial support for the real economy.
The State Council executive meeting held on August 18 deployed measures to reduce corporate financing costs and personal consumption credit costs, and increase financial support for the real economy.
As a result of Monday’s move, the total decline in the over-five-year LPR so far this year has reached 35 basis points, following reductions in May and January.
After the interest rate cut on August 22, the LPR with a maturity of more than five years has been reduced by 35 basis points since the beginning of this year (the first two interest rate cuts were in January and May).
Wu Chaoming, deputy director of the Chasing International Economic Institute, said more reductions in the over-five-year LPR are possible if the real estate sector recovers at a sluggish pace.
Wu Chaoming, vice president of the Caixin International Economic Research Institute, said that if the real estate industry recovers slowly, the LPR over a five-year period may be further lowered.
Yan Yuejin, director of the E-house China Research and Development Institution, said Monday’s cut could save about 90 yuan ($13.16) in monthly payments for a homebuyer who takes out a 30-year mortgage with a principal of 1 million yuan, with those with existing mortgages seeing reductions in their payments starting next year.
Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, pointed out that from next year, mortgage buyers can enjoy the benefits of interest rate cuts. Based on the commercial loan amount of 1 million yuan and the loan for 30 years, this LPR reduction will reduce the monthly payment by about 90 yuan.
Source: China Daily Network
Translator & Editor: Dany
[Editor in charge: Danni Chen]