Kuwait City: China on Tuesday cut its benchmark lending rates by 10 basis points in a first-of-its-kind step this year, aiming at reducing corporate and family finance costs, boosting market confidence and backing real economic growth. The one-year loan prime rate (LPR), a benchmark determined by banks, was lowered to 3 percent from the previous reading of 3.1 percent, the People's Bank of China said in a release, carried by Xinhua news agency.
According to Kuwait News Agency, the over-five-year LPR, on which many lenders base their mortgage rates, was lowered to 3.5 percent from 3.6 percent. Tuesday's LPR decline, the first this year, is expected to further reduce the borrowing costs of businesses and individuals, and support the steady growth of the real economy. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
Meanwhile, China's major commercial banks on Tuesday announced reductions in deposit interest rates. The one-year fixed-term deposit interest rate was lowered by 15 basis points to 0.95 percent. The rates also came to 1.05 percent for two years, 1.25 percent for three years, and 1.3 percent for five years.