(Yicai Global) July 18 -- Industrial and Commercial Bank of China, the country’s biggest lender by assets, has reportedly not received notification to change the interest rates on outstanding mortgages, contrary to a recent rumor.

ICBC is aware of the rumor and has not received any notice to change the rates on existing home loans, Securities Times reported yesterday, citing the Beijing-based bank’s customer service department. Borrowers can contact the branches that handled their loans about the matter, it added.

According to screenshots circulating online, borrowers can apply for a new ICBC mortgage contract with a better interest rate if they have not defaulted on loan repayments over the past two years.

The customer service departments of Bank of China and other Chinese lenders also said they had not received any notice to change rates on outstanding home loans, the report said.

Speculation about banks cutting mortgage interest rates was sparked after Zou Lan, head of the monetary policy department at the People's Bank of China, spoke on the subject at a press conference on July 14.

“In accordance with the principles of marketization and the rule of law, we support and encourage commercial banks and borrowers to change their contracts by consultation or the banks to replace outstanding loans with newly granted ones,” Zou said.

Outstanding individual mortgages rose 1.2 percent to CNY38.8 trillion (USD5.4 trillion) in China at the end of 2022 from a year earlier, slowing to single-digit growth for the first time in nearly a decade, PBOC data showed.

Cutting rates on existing home loans would make business more difficult for lenders, according to industry insiders. It would significantly increase the pressure on banks, especially those with a high share of home loans, said Liao Zhiming, chief banking analyst at China Merchants Securities.

China Construction Bank had more than CNY6.5 trillion in outstanding individual mortgages at the end of last year, accounting for up to 79 percent of its total existing personal loans, according to financial data platform Wind Information. The figure was over 70 percent at ICBC, Agricultural Bank of China, and Bank of China.

Editor: Martin Kadiev