On July 22, the People’s Bank of China (PBoC) announced a cut in the five-year loan prime rate (LPR) by 10 basis points, from 3.95 percent to 3.85 percent. At the same time, the one-year LPR was also decreased by 10 basis points to 3.35 percent.
Yan Yuejin, research director of Shanghai-based E-House Real Estate Research Institute, commented that the cut in the LPR will exert a positive impact on enhancing the subsequent dynamism of the real economy in addition to reducing capital costs, supporting economic development and playing a counter-cyclical regulatory role.
The decrease in the LPR will lower mortgage costs, which will bolster the weak real estate market to a certain degree.
