17 cities report lower interest rates for buyers, following move of the PBOCAt least 17 cities have cut personal housing mortgage interest rates for first-time homebuyers to as low as 4.25 percent, in a move that will reduce costs of home purchases and help boost rational housing demand, said industry analysts.Among the 42 cities tracked by Rong360 Digital Technology Institute, 17 cities have adjusted downward mortgage interest rates. These cities adopted rates as low as 4.25 percent for first-home purchases, and 5.05 percent for second-home purchases between May 20 and Wednesday, reported Securities Daily.In addition, at least another six cities have trimmed their mortgage rates for first-home purchases to below 4.6 percent, and second homes in at least 24 cities can apply for a rate of 5.05 percent, the report added.The cuts in personal mortgage rates are in response to the central bank's adjustment of the market-based benchmark lending rate on May 20, and it is regarded as one of the greatest reductions in the over-five-year loan prime rate (LPR) since the scheme was reformed, according to industry experts.The over-five-year LPR, on which many lenders base their mortgage rates, was lowered by 15 basis points to 4.45 percent, whilst the one-year LPR stood unchanged at 3.7 percent compared to a month earlier, according to the National Interbank Funding Center, which is authorized to unveil rates set by the country's central bank, the People's Bank of China.On May 15, the PBOC and the China Banking and Insurance Regulatory Commission announced in a joint statement that based on the corresponding tenor of the benchmark LPR, first-time homebuyers can receive interest rates at 20 basis points below home loans from commercial banks.The cut in the over-five-year LPR will reduce home loan costs for homebuyers, as they can pay less mortgage interest every month, said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.Taking a 30-year fully amortized loan of 1 million yuan for example, the monthly payment will shrink about 207 yuan as the interest rate is lowered from 4.6 percent to 4.25 percent, according to Yan's calculation.The differentiated home mortgage interest rates, along with various policies introduced from city to city, are expected to help unleash rational demand, Yan said.Chen Wenjing, deputy director of research with the China Index Academy, said market confidence will get boosted and expectations will be strengthened.There is still ample room for cutting loan rates at local levels, and more local governments are going to follow suit in the future, with the majority－except for first-tier cities and major hotspot second-tier cities－likely to peg their home loan rates to the bottom of the required level.As of Thursday, housing regulating measures were announced up to 93 times in May, and policies related to the housing market were announced more than 210 times in more than 120 Chinese cities this year, according to Wang Xiaoqiang, chief analyst with the Zhuge Real Estate Data Research Center.On Sunday, Yibin, Sichuan province, announced it will provide a maximum of 30,000 yuan home purchase subsidies for families meeting specific requirements, and families with three children can apply for an extra 30,000 yuan home purchase subsidy, ThePaper.cn reported.On Monday, Meishan, also in Sichuan, pledged to subsidize a maximum of 600 yuan per square meter for home purchases for talented residents, the city's official website announced.Thanks to the easing measures, the housing market has been showing signs of stabilizing recently, Wang said.17 cities report lower interest rates for buyers, following move of the PBOCAt least 17 cities have cut personal housing mortgage interest rates for first-time homebuyers to as low as 4.25 percent, in a move that will reduce costs of home purchases and help boost rational housing demand, said industry analysts.Among the 42 cities tracked by Rong360 Digital Technology Institute, 17 cities have adjusted downward mortgage interest rates. These cities adopted rates as low as 4.25 percent for first-home purchases, and 5.05 percent for second-home purchases between May 20 and Wednesday, reported Securities Daily.In addition, at least another six cities have trimmed their mortgage rates for first-home purchases to below 4.6 percent, and second homes in at least 24 cities can apply for a rate of 5.05 percent, the report added.The cuts in personal mortgage rates are in response to the central bank's adjustment of the market-based benchmark lending rate on May 20, and it is regarded as one of the greatest reductions in the over-five-year loan prime rate (LPR) since the scheme was reformed, according to industry experts.The over-five-year LPR, on which many lenders base their mortgage rates, was lowered by 15 basis points to 4.45 percent, whilst the one-year LPR stood unchanged at 3.7 percent compared to a month earlier, according to the National Interbank Funding Center, which is authorized to unveil rates set by the country's central bank, the People's Bank of China.On May 15, the PBOC and the China Banking and Insurance Regulatory Commission announced in a joint statement that based on the corresponding tenor of the benchmark LPR, first-time homebuyers can receive interest rates at 20 basis points below home loans from commercial banks.The cut in the over-five-year LPR will reduce home loan costs for homebuyers, as they can pay less mortgage interest every month, said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.Taking a 30-year fully amortized loan of 1 million yuan for example, the monthly payment will shrink about 207 yuan as the interest rate is lowered from 4.6 percent to 4.25 percent, according to Yan's calculation.The differentiated home mortgage interest rates, along with various policies introduced from city to city, are expected to help unleash rational demand, Yan said.Chen Wenjing, deputy director of research with the China Index Academy, said market confidence will get boosted and expectations will be strengthened.There is still ample room for cutting loan rates at local levels, and more local governments are going to follow suit in the future, with the majority－except for first-tier cities and major hotspot second-tier cities－likely to peg their home loan rates to the bottom of the required level.As of Thursday, housing regulating measures were announced up to 93 times in May, and policies related to the housing market were announced more than 210 times in more than 120 Chinese cities this year, according to Wang Xiaoqiang, chief analyst with the Zhuge Real Estate Data Research Center.On Sunday, Yibin, Sichuan province, announced it will provide a maximum of 30,000 yuan home purchase subsidies for families meeting specific requirements, and families with three children can apply for an extra 30,000 yuan home purchase subsidy, ThePaper.cn reported.On Monday, Meishan, also in Sichuan, pledged to subsidize a maximum of 600 yuan per square meter for home purchases for talented residents, the city's official website announced.Thanks to the easing measures, the housing market has been showing signs of stabilizing recently, Wang said.
