The 25-basis-point cut to over-five-year loan prime rate to 3.95 percent on 20th of Feb is good news for mortgages, and will help commercial banks to lower interest rates on first-home loans and guide more capital to private and small enterprises, industry experts said on 21st of Feb.
In its Third-Quarter Monetary Policy Report, the bank said it encouraged more cities to lower or abolish the mortgage rate floor for first-time home buyers since the start of the year.
Stressing the need of optimizing foreign exchange policies, efforts were urged to keep a close eye on cross-border capital flows and strengthen macroprudential regulation and expectation management to keep the yuan exchange rate generally stable at a reasonable and balanced level.
Supported by the sound fundamentals of China's economy and the expected improvement of its capital market performance this year, the trend of homebuyers prepaying their mortgages is likely to gradually subside, as they seek higher returns elsewhere, experts said.
As China established a dynamic mortgage rate adjustment mechanism on mortgage rates for first-time home buyers, more and more cities cuts the interest rates of housing loans after the spring festival.