China’s Central Bank Reduces Key Loan Interest Rate to Stimulate Property Market Growth, Chinese Public Shows Concern
The central bank of the Chinese communist regime recently lowered China’s loan prime rate to a historic low level.
In an effort to bolster the property market amidst a struggling economy, the central bank cut the long-term loan prime rate (LPR) to a record low. Despite this move, the Chinese public, who are wary following a recent stock market crash, remain hesitant to invest in real estate.
On Feb. 20, the central bank announced a 25-basis point cut in the LPR for loans with a maturity of over 5 years, bringing it down to 3.95 percent.
This rate adjustment is the most significant since the adoption of the LPR pricing model in October 2019. Experts view this as an unprecedented move to rescue the market and signal a potential turning point for the property sector.
Analysts predict that this interest rate cut will have a considerable impact on real estate, particularly in major cities. They anticipate that mortgage rates will remain at historically low levels for the next three years.
However, the general public in China perceives these experts as biased towards special interests within the ruling party, leading to skepticism and reluctance in real estate investments.
Some experts, like Cao Dewang, caution against excessive mortgage loans in China, warning of potential risks in the real estate market. Netizens express concerns over the negative impact of reduced mortgage interest rates on ordinary people’s wealth.
Despite the rate cut, commercial property prices in 70 major Chinese cities continued to decline in January, signaling ongoing market challenges. Analysts suggest that the interest rate cut is a response to the economic downturn and a stock market crash, with hopes of stimulating real estate consumption and overall market growth.
However, analysts like Wang Guo-chen remain cautious, believing that the rate reduction may not be sufficient to revitalize the real estate market, given the existing debt issues and overall economic uncertainty.
The Chinese government’s interventions in the stock market have further eroded investor and consumer confidence, casting doubts on the effectiveness of such measures in boosting the economy.
As the market remains volatile, concerns persist over the long-term prospects of real estate and the economy in China.
