Beijing's interest rate for new first-home mortgages drops to 3.05%, with the national average interest rate for first-home mortgages expected to fall below 3%

With the 10 basis point (BP) reduction in the loan prime rate (LPR) for loans with a maturity of over five years on May 5, mortgage rates across the country are set for new adjustments. A reporter from Cailian Press learned today from staff at the personal loan departments of several banks in Beijing that starting tomorrow, the mortgage rate for new loans in Beijing will be lowered by 10 basis points. Given that the current LPR plus or minus spread for mortgage rates remains unchanged, the interest rate for first-time homebuyers will drop to 3.05%.

Industry insiders told Cailian Press that the policy floor for mortgage rates for first-time and second-home buyers has been lifted nationwide, and in many cities, the mortgage rate for first-time homebuyers has already fallen to a historic low of around 3.0%. The reduction in the LPR for loans with a maturity of over five years will help guide mortgage rates across the country to decline further, continuing to reduce the cost of home purchases for buyers.

Starting tomorrow, Beijing's mortgage rate for first-time homebuyers will drop to 3.05%, hitting a new historic low

"With the LPR reduction today, new loans will also be adjusted. After the adjustment, the mortgage rate for first-time homebuyers will be 3.05%, down from 3.15%," said a staff member from the personal loan department of a major bank in Beijing to Cailian Press. The rate for second-home buyers will also be lowered by 0.1%, with the rate for second homes within the Fifth Ring Road dropping from 3.55% to 3.45%. "Loans disbursed tomorrow will be at the adjusted rate, while loans disbursed today will still follow the 3.15% rate (for first-time homebuyers)," the staff member said.

Another staff member from the loan department of another major bank in Beijing also stated that after the LPR adjustment, the mortgage rate for first-time homebuyers has now dropped to 3.05%, and the mortgage rate for second homes outside the Fifth Ring Road has been lowered by 0.1% to 3.25%. "New loans disbursed tomorrow will be at the new rate, while loans are generally not disbursed today," the staff member said. When mentioning that there have been adjustments to the LPR plus or minus spread for mortgage rates in some regions recently, the staff member said that no notification of adjustments to the LPR plus or minus spread has been received so far.

Today, the People's Bank of China authorized the National Interbank Funding Center to announce the new LPR quotes: the one-year LPR is reported at 3.0%, down from 3.10% last month; the LPR for loans with a maturity of over five years is reported at 3.50%, down from 3.60% last month.

Chen Wenjing, Director of Policy Research at the China Index Academy, told Cailian Press that the recent 0.25 percentage point reduction in the housing provident fund loan interest rate has, for some cities, released the interest rate spread between housing provident fund loans and commercial housing loans, facilitating further adjustments and optimizations to commercial housing loan interest rates. The reduction in the LPR for loans with a maturity of over five years will help guide mortgage rates across the country to decline further, continuing to reduce the cost of home purchases for buyers.

For Beijing specifically, Chen Wenjing also noted that previously, the mortgage rates for first-time and second-home buyers were 3.15% (LPR-45BP) and 3.35% (outside the Fifth Ring Road, LPR-25BP)/3.55% (within the Fifth Ring Road, LPR-5BP), respectively. After this adjustment, the mortgage rates for first-time and second-home buyers in Beijing are expected to be adjusted to 3.05% (LPR-45BP) and 3.25% (outside the Fifth Ring Road, LPR-25BP)/3.45% (within the Fifth Ring Road, LPR-5BP), respectively, with the rates for first-time homebuyers and second homes outside the Fifth Ring Road both reaching historic lows.

"In addition, the current LPR cut will also drive down the mortgage rate on existing home loans. After the mortgage rate repricing date, the mortgage rate on existing home loans can follow the downward adjustment, reducing the repayment pressure on residents who have already purchased homes," added Chen Wenjing.

The average mortgage rate for first homes nationwide is expected to drop to the "2" range.

According to statistics from the Central China Real Estate Research Institute, the weighted average interest rate for newly issued commercial individual housing loans nationwide in Q1 2025 was 3.11%, slightly fluctuating from 3.10% in Q4 2024 (around 3.33% in Q3 2024). Among them, the average mortgage rate for first homes was around 3.06%. Zhang Dawei, chief analyst at Central China Real Estate, stated that after this interest rate cut, the mortgage rate for first homes across China is expected to drop to around 2.95%.

"Before the rate cut, the mortgage rates for first homes in most cities had already dropped to between 2.8% and 3%. The mortgage rates for first homes in Beijing, Shanghai, and Shenzhen were all LPR-45BP. After this rate cut, the highest rate for first homes in first-tier cities will drop to 3.05%, while other cities will see a comprehensive reduction to around 2.9," Zhang Dawei believes.

Overall, Chen Wenjing stated that the recent reduction in housing provident fund loan rates and the current cut in the 5-year LPR will further reduce the cost of purchasing homes, support the release of residents' housing demand, and play a positive role in consolidating the stable situation of the real estate market. In addition, Pan Gongsheng, the governor of the central bank, previously pointed out that "based on the economic and financial operation situation and the effectiveness of various tools, the scale of tools can be expanded and the policy elements of tools can be improved." It is expected that more policies supporting the real estate market with funds will continue to be implemented in the future, such as financial policies supporting the sale of existing homes and providing supporting funds for urban renewal.

Zhang Dawei stated that, according to the data, the Loan Prime Rate (LPR) has undergone multiple cuts, with a cumulative reduction of 60 basis points. This continuous rate cut aims to release more liquidity into the market, reduce corporate financing costs, and promote the development of the real economy. As an important part of the national economy, the real estate market is naturally affected by this policy. The market generally expects that there is still room for further LPR cuts in 2025, with an expected range of 40-60 basis points.

Looking ahead, Wang Qing, chief macro analyst at Oriental Jincheng, told a Caixin reporter that the current cuts in the two-term LPR quotations are consistent. However, considering the need to further strengthen policies to stabilize the property market, especially after the central bank announced a 0.25 percentage point cut in the housing provident fund loan rate on May 7, which opened up space for a reduction in commercial mortgage rates for residents, the regulatory authorities may further guide the 5-year LPR quotation downward to promote a larger reduction in residential mortgage rates. This is a crucial move to alleviate the current issue of relatively high actual mortgage interest rates and continuously drive the real estate market to stop declining and stabilize.

Wen Bin, the chief economist of China Minsheng Bank, believes that with the easing of Sino-US tariffs and the implementation of policies such as RRR cuts and interest rate cuts, it is expected that GDP growth in Q2 may still reach a relatively high level of around 5%, reducing the necessity and urgency for another interest rate cut in the short term, and the timing of LPR reduction will also be postponed accordingly.