China has cut its main mortgage interest rate by the most on record as it seeks to reduce the economic impact of Covid-19 lockdowns and a property sector slowdown, reports the Financial Times. The five-year loan prime rate was lowered from 4.6% to 4.45% on Friday. The reduction in the rate, which is set by a committee of banks and published by the People’s Bank of China, will directly reduce the borrowing costs on outstanding mortgages across the country.
A cut was widely anticipated following data this week showing worsening economic conditions across the economy, but the 15 basis point reduction exceeded analyst expectations and was the most since the country’s rate system was reformed in 2019.
“The move marks the strongest signal and action to support the property sector in recent years,” analysts at Citi said in a research note.