The central bank of China has cut its mortgage rate as officials are working to support the crisis-hit property market. The People’s Bank of China (PBOC) has lowered the five-year loan prime rate (LPR) by 1.5 percent, which is matching its biggest cut on record. The second biggest economy in the world is facing a property crisis that has seen some building the projects grind to a pause.
COVID-19 lockdowns are also affecting consumers and businesses in the country. The PBOC has decreased the five-year rate to 4.2 percent, which will reduce the cost of home mortgage repayments across China.
The central bank of China has also lowered the one-year loan prime rate, which is normally used to determine corporate loans, from 3.7 percent to 3.65 percent. Iris Pang, chief economist at ING Bank for Greater China, said these moves are a part of a wider effort to shore up the real estate industry of the country.
Many Chinese developers have paused building work on homes that had already been sold due to concerns over their finances. Many of the home buyers are also known to have threatened to stop paying their mortgages until they restart the work. The government of China has also signalled that the country might miss an annual economic growth target of 5.5 percent.
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