Chinese banks cut mortgage rates

Mortgage interest rates are falling in Chinese first-tier cities with the gradual recovery of the property market.

Large banks in Shanghai and Beijing are adjusting the terms they offer on loans to first-time home buyers. Most of the changes are to come within a month.

Some banks plan to reduce the interest rates charged to such borrowers to as low as 15% below the current 7.05% benchmark level set by the People’s Bank of China, the country's central bank. State-owned lenders, commercial banks and foreign-funded banks have all indicated their intent to make lower rates.

The Shanghai branch of Bank of China Ltd has started to offer a 15% discount on the mortgage interest rates offered to first-time home buyers with good credit records. It had previously charged up to 10% above the benchmark rate.

This month, China Everbright Bank Co Ltd lowered the mortgage interest rate it offers qualified clients by 15.

Foreign banks have also joined in with HSBC offering a 15% discounts since March to first-time home buyers who took out loans worth 1 million yuan ($158,700) or more. Clients who borrow smaller amounts, though, can only enjoy a 10% discount.

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