By love-89.com Several banks in China have recently announced adjustments to their existing mortgage rates, aligning them to the Loan Prime Rate (LPR) minus 30 basis points. If a borrower’s current mortgage rate is already below this adjusted LPR rate, the bank will not make any changes. This move is expected to bring the national average of existing mortgage rates down to approximately 3.55%, marking a decrease of about 0.5 percentage points. The Industrial and Commercial Bank of China (ICBC) will be the first to implement the changes on October 25, with other banks set to complete their adjustments by October 31.
According to reports from CCTV and Jiemian News, a number of banks—including ICBC, Bank of Communications, China Merchants Bank, Pudong Development Bank, Zhejiang Commercial Bank, and Industrial Bank—issued a series of frequently asked questions regarding the adjustments.
In China, the LPR is offered in one-year and five-year intervals, with the one-year rate currently at 3.35% and the five-year rate at 3.85%. Since mortgage rates are linked to the five-year rate, the new standardized rate will be set to 3.55%.
At a press conference on September 24, the Governor of the People’s Bank of China, Pan Gongsheng, stated that the goal is to guide commercial banks to bring existing mortgage rates closer to those of newly issued loans, with an anticipated average reduction of approximately 0.5 percentage points. This policy is expected to benefit around 50 million families, totaling 150 million individuals, and reduce annual interest expenses for households by about 150 billion yuan.
As of the end of July, the nationwide weighted average rate for existing mortgages in China stood at approximately 4.06%. For the first eight months of this year, the average rate for newly issued mortgages was 3.61%. The upcoming adjustments will thus represent a significant decrease from the prior average of 4.06%.
Estimates suggest that if a borrower has an existing mortgage of 1 million yuan with a 25-year term and a rate decrease from 4.4% to 3.55%, they could save approximately 5,600 yuan in interest expenses each year.