(Yicai Global) July 21 -- Efforts of China's central bank to make mortgages more affordable are reportedly starting to show.

Some commercial banks in Changzhou, Jiangsu province, have begun working to lower the interest rates of existing home loans one week after an official from the People's Bank of China encouraged them to do so, Changzhou Daily reported today. Lenders have communicated with borrowers about the planned moves but no instructions or details have been announced yet, the report added. 

However, banks contacted by Yicai Global, including Bank of China, China Construction Bank, Bank of Hangzhou, and Bank of Ningbo, said that they are still using the original rates as bosses have not informed the staff about any adjustments.

The optimism of lower borrowing costs stems from a statement by Zou Lan, head of the PBOC's monetary policy department, who said on July 14 that commercial banks and other kinds of lenders are encouraged to amend their contracts with borrowers through voluntary negotiations in accordance with market-oriented principles and the rule of law.

Lenders have no motivation to adjust the rates independently, bank employees told Changzhou Daily. But as many homeowners are now choosing to repay their loans early this year and may shift to other banks with lower rates, lenders may opt for lower margins as slim profits are better than none at all, they added.

Several banks in eastern China's Changzhou already allow borrowers to adjust their repayment schedule on their mobile applications so that they reward those who choose to pay back the same amount of principal each month to pay less interest. 

The People's Bank of China has made such dramatic moves to existing mortgages before as in 2008 the central bank slashed the floor of mortgage rates to stand 30 percent lower than the loan prime rate, a key benchmark for commercial lending.

Editor: Emmi Laine