(Yicai Global) Aug. 20 -- China's mortgage rates will remain steady despite the new market-oriented loan prime rate system, according to the deputy governor of the nation's central bank.
With the LPR reform, the reference rate of mortgages will shift from the benchmark interest rate to LPRs and the People's Bank of China is also preparing a new policy for the purpose but the final mortgage rates will stay generally stable, Liu Guoqiang told Yicai Global at a press conference today.
China's National Interbank Funding Center set the country's first new market-oriented loan prime rate benchmarks at 4.25 percent for one-year lending and 4.85 percent for five-year loans today, as the country looks to cut funding costs for the real economy. The center will set new LPRs on the 20th of each month.
The PBOC introduced the LPR scheme in 2013 but the system's previous iteration was not market-based and gave banks more freedom to decide their own loan rates. Under the old program, the one-year LPR had been 4.31 percent for some time.
Editor: Emmi Laine