Some of China’s state-run banks will soon cut interest rates on existing mortgage loans, Reuters reported on the 29th (local time). Reuters quoted multiple sources as saying that for some state-run banks, the interest rate on time deposits will also be lowered by 10-25bp (1bp=0.
Bloomberg also quoted sources as saying that large banks such as the Industrial and Commercial Bank of China and the Construction Bank of China could announce measures to cut existing mortgage and deposit rates this week.
Bloomberg then said that a significant portion of China’s mortgage loans, amounting to 38.6 trillion yuan, will be affected by the move, adding, “This is the latest government-led move to promote the growth of the world’s second-largest economy.”
The move is interpreted as a move aimed at boosting consumption, increasing funds for stock market inflows and easing pressure on lenders, but it is unclear whether it will be enough to sustain the recovery of investor confidence, Bloomberg said.
China’s state-run banks have taken similar measures to cut interest rates on qualified borrowers in 2009, shortly after the U.S.-originated financial crisis, the news agency added.
In China, not only related industries but also the entire country faced an economic crisis due to the sluggish real estate market.
Meanwhile in the second quarter of this year, the Organization for Economic Cooperation and Development, the gross domestic product of OECD member countries, and GDP are estimated to have increased 0.4% compared to the previous quarter.
The OECD, headquartered in Paris, France, said in its second-quarter GDP growth report that it fell slightly from 0.5% growth in the first quarter.
Among the member countries, fluctuations were mixed, with Japan soaring from 0.9% in the first quarter to 1.5% in the second quarter, while Italy fell from 0.6% to 0.3%.
