Chinese banks to cut existing mortgage rates as property crisis deepens

investing.com:

BEIJING (Reuters) -Some Chinese state-owned banks will soon lower interest rates on existing mortgages, three sources familiar with the matter said on Tuesday, as Beijing ramps up efforts to revive the debt crisis-hit property sector and bolster a sputtering economy.

The interest rates reduction on existing mortgages will only be available to first-time homebuyers, said the sources, who declined to be named as they were not authorized to speak to media.

The sources said that scale of the reduction by state-owned banks would be different for different types of clients and in different cities, and could be as much as 20 basis points in some cases.

The country's central bank, the People's Bank of China (PBOC), did not immediately respond to Reuters request for comment after business hours.

The reduction in existing mortgage rates will come amid several other property, economic and market support measures Beijing has announced over the past few weeks, as concerns mount about the health of the world's second-largest economy.

The property sector, which accounts for roughly a quarter of the economy, has lurched from one crisis to another since 2021, and contagion fears deepened this month after liquidity stress in leading developer Country Garden became public.

Chinese lenders were widely expected to cut interest rates on existing mortgages after the PBOC earlier this month said that it would guide commercial banks to do so.

The central bank's proposal to cut rates, which came after a wave of early repayments of mortgage debt, aims to reduce the interest rate costs for homebuyers and to boost consumption amid a slowing economy.

China has been cutting new mortgage rates since last year to boost sales in its moribund property