This morning, the People's Bank of China (PBOC) authorized the National Interbank Funding Centre (NIFC) to announce the new loan prime rates (LPRs), China’s credit rating agency Golden Credit Rating said in a report. The one-year term was quoted at 3% (3% in April); and the over-five-year term was quoted at 3.5% (3.5% in April). Golden Credit Rating pointed out that the LPRs for the two term types in mainland China in June remained intact, in line with market expectations.

The main reason was that the LPRs for the two term types were simultaneously lowered, after the policy rate cut by the PBOC in May, and are being transmitted to loan rates. The policy rate remained unchanged in June, and there were no immense changes in the factors affecting the LPR quotation spread. The unchanged LPRs for the two term types in June were in line. The agency expected a policy observation period will commence in the short term, and the LPR quotations may continue to remain stable.

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Separately, considering that the policy to stabilize the housing market needs to be further strengthened in 2H25. Especially after the PBOC announced a 0.25-ppt reduction in the provident fund loan rate on May 7, which opens up space for future reductions in commercial mortgage rates for residents, it is expected that the regulatory authorities may guide the over-five-year LPR downward separately to promote a more substantial reduction in residential mortgage rates. This is a key move at this stage to alleviate the issue of high actual mortgage rates, galvanizing housing demand, and reverse market expectations.