(Yicai Global) June 16 -- Chinese people prefer buying insurance and gold or repaying their housing loans early instead of consumption after the central bank lowered its medium-term rate of lending money to big commercial banks to promote borrowing and spending.

Professionals working in the markets of insurance and gold said to Yicai Global that more people have recently shown interest in purchasing products.

The People’s Bank of China lowered the medium-term lending facility rate by 10 base points yesterday and will likely cut the loan prime rate on June 20 to boost the demand for credit loans, investment, and consumption.

Ms. Zhao is one of the people who decided to repay their housing loans ahead of schedule. "I have no idea where to invest my money, so I decided to repay the mortgage first to ease the burden because I think I would probably get a lower return on investment than the interest that I need to pay to the bank."

The trend has become extremely popular in the past month. Mortgage repayments totaled around CNY150 million (USD21.1 million) last month, up by five to six times, according to a personal loan specialist at a Wenzhou branch of a state-owned bank.

Several analysts said that early repayments should enhance market confidence and stimulate demand for credit loans. Moreover, if the PBOC cuts the LPR, a key benchmark for loans, this month, the move would boost residents’ purchasing power and confidence and improve expectations in the real estate market which has been sluggish recently, per Qi Dong, a real estate analyst at Kaiyuan Securities.

However, not all banks may be happy about the unexpected inflows of money. The early repayments will increase banks’ burden as returns on investment are lower than housing loan interests, an investment manager at Ping An Real Estate said.

The demand for savings deposit and payment protection insurance products is likely to be rising, according to Wang Fangzhao, a non-banking finance analyst at Soochow Securities. Insurance products still have sustained competitiveness for their feature of “security,” so the demand for such products is still robust, Wang added.

Editor: Emmi Laine