China Seeks to Stabilize Property With Loans, Lower Rates

(Bloomberg) — Chinese banks lowered their benchmark lending rates while authorities stepped up support for the property market with additional loans, a government-guided attempt at alleviating a worsening housing crisis and bolstering borrowing demand. 

The five-year loan prime rate (LPR), a reference for mortgages, was reduced by 15 basis points to 4.3% after being cut by the same magnitude in May. The one-year loan prime rate was cut to 3.65% from 3.7%, the first reduction since January, and smaller than the 10 basis-point drop that economists had expected.

The rate cuts were the latest in a series of actions intended to help the real estate sector, coming days after the PBOC and two other ministries said special loans will be offered through policy banks to ensure stalled property projects are delivered to buyers. Last week, the central bank surprised with a 10-basis-point cut to the rate on its one-year policy loans, another sign of an increase in support.