China made its biggest ever cut to mortgage rates on Tuesday, as the authorities try to support the struggling property sector, though the response from stock markets was muted. The People’s Bank of China said that the country’s lenders would reduce their five-year loan prime rate (LPR) by 25 basis points to 3.95%, a bigger cut than expected and the first since June last year. The one-year LPR was maintained at 3.45%.
The lowering of borrowing costs was “a logical inevitability,” said Wei Yao, economist at Societe Generale, as Beijing battles to support an economy buffeted by a collapsing property market that has hit consumer sentiment amid slow growth and a deflationary environment. “This rate matters specifically for the housing sector as it is the reference rate for household mortgages and long-term corporate loans,” Yao added. “Clearly, the PBoC wants to direct its easing to the housing market, which has continued to weaken around the turn of the year.” The looseni …
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The lowering of borrowing costs was “a logical inevitability,” said Wei Yao, economist at Societe Generale, as Beijing battles to support an economy buffeted by a collapsing property market that has hit consumer sentiment amid slow growth and a deflationary environment. “This rate matters specifically for the housing sector as it is the reference rate for household mortgages and long-term corporate loans,” Yao added. “Clearly, the PBoC wants to direct its easing to the housing market, which has continued to weaken around the turn of the year.” The looseni …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]