(Yicai) Jan. 11 -- Nanjing and four other municipalities in China trimmed their mortgage rates in the new year, according to a report, meaning they are now at record lows in most cities.

Many banks in Nanjing cut the interest rate on first-home loans by 10 base points to 3.9 percent on Jan. 9, National Business Daily reported the same day. That is 30 bps below the central bank’s benchmark loan prime rate. The rate for second-time home buyers was unchanged at 4.5 percent, or 30 bps above the LPR. 

Foshan and Dongguan in Guangdong province temporarily canceled the lower interest rate floor on mortgages for first-time buyers on Jan. 1, and banks in the cities will decide the rate levels by themselves based on the market, the report said.

Hohhot in Inner Mongolia Autonomous Region and Jiujiang in Jiangxi province cut rates for first-time buyers by 40 bps from the LPR to 3.8 percent on the first day of 2024.

Beijing and Shanghai, two first-tier cities, lowered their down payment ratios and mortgage rates for first-time buyers on Dec. 14 to stimulate the real estate market.

These adjustments were made based on a policy that the People’s Bank of China introduced at the end of 2022. Under the policy local governments can cut lending rates for first-time home buyers if new-build prices have fallen for three straight months. They must restore them to the original level if prices pick up for three months in a row.

The mortgage rates for first-time home buyers in at least 37 of China’s 70 major cities are below 4 percent, with the lowest being 3.6 percent. Rates in first-tier cities remain above 4 percent, including 4.2 percent in Beijing and 4.1 percent in Shanghai. The LPR is currently set at 4.2 percent.

The average mortgage rate for first-time home buyers in major cities dropped 24 bps to 3.86 percent last year, while the average for second-time buyers fell 50 bps to 4.41 percent, the lowest since January 2019, according to data from Ke Research Institute.

Editors: Dou Shicong, Martin Kadiev