(Yicai Global) Aug. 23 -- China’s minimum mortgage rate is now 4.1 percent, the lowest level since 2008, after a further reduction was made to the country’s benchmark lending rate yesterday. However, it remains to seen how much this will motivate purchasers of residential property, analysts said.

The People’s Bank of China lowered the loan prime rate, to which mortgages, corporate loans and fixed-asset investments are anchored, yesterday. The one-year LPR was trimmed five basis points to 3.65 percent and that of the five-year LPR 15 bps to 4.3 percent. Mortgages, which are linked to the five-year LPR, can be set at a rate 20 bps lower for first-time home buyers.

The core aim of the cuts in both the one-year and five-year LPRs is to bring the costs of borrowing, in the form of mortgages and corporate loans, down and optimize credit lending, said Li Chao, chief economist at Zheshang Securities. It is possible that the five-year LPR will be slashed further should mortgage volumes not improve significantly.

The previous rate cut of 15 bps to the five-year LPR in May did little to spur house buying, said Sun Deji, macroeconomic analyst at BOC International China.

There has been a jump in enquiries about mortgages, real estate insiders said. But many people are delaying buying property due to weak expectations that property prices will rise, concerns that many new builds are going unfinished, and worries about the effect of the pandemic on people’s income, Yicai Global has learned.

The restoration of credit in the real estate sector needs to be closely observed, said Ming Ming, chief economist at Citic Securities. In the face of the current grim economic situation, the issuance of more supportive policies in the fields of currency, finance and real estate is to be expected.

Editors: Xu Wei, Kim Taylor