China Cuts Mortgage Interest Rate Amid Property Crisis

China's central bank has reduced its benchmark mortgage interest rate for the first time in eight months to support the real estate market amid a prolonged property crisis in the world's second-largest economy, as reported by Kyodo News.

China's real estate sector has been affected by the heavy debts of major developers China Evergrande Group and Country Garden Holdings Co. Amid concerns it could slip into deflation. I Photo: Country Garden Hong Kong

The People's Bank of China announced that it had lowered the five-year loan prime rate by 0.25 percentage points to 3.95%, marking the first reduction since June last year.

The bank left unchanged the one-year loan prime rate, which serves as the benchmark lending rate, at 3.45%.

This mortgage rate cut followed a monetary easing move implemented on Feb. 5 to reduce the amount of cash that banks must hold as reserves, aiming to inject about 1 trillion yuan ($140 billion) of liquidity into the country's economy.

China's economy has been slowing, with its real estate sector affected by the heavy debts of major developers China Evergrande Group and Country Garden Holdings Co.

Amid concerns it could slip into deflation, the Asian powerhouse is also grappling with high youth unemployment, subdued external demand, and mounting local government debt.

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