China cuts LPR to spur bank lending and boost borrowing

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By Chu Daye (Global Times) 15:03, May 21, 2025

"The policy to further reduce interest rates will help lower the cost of home mortgages, which also should stimulate housing consumption," Yan said.

For a 30-year housing mortgage loan with a value of 1 million yuan, the cut in the LPR should bring a sum cost reduction in principal and interest by 19,000 yuan, Yan estimated.

On Tuesday morning, China's major state-owned commercial banks and some joint-stock banks announced reductions in deposit interest rates.

The one-year fixed-term deposit interest rate was cut by 15 basis points to 0.95 percent, according to the official deposit interest rates announced by Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China and Bank of Communications.

The moves were in accordance with overall rate reductions and aim to support the real economy, according to industry experts.

China Merchants Bank, a joint-stock bank based in Shenzhen, South China's Guangdong Province, also cut its deposit interest rate, with the one-year fixed-term deposit interest rate being reduced to 0.95 percent.

Following the banks' announcements on Tuesday, the one-year fixed-term deposit interest rate has moved below 1 percent, according to the Securities Times.

The latest round of deposit interest rate reductions for state-owned banks followed two rounds of cuts in 2024, according to media reports.

(Web editor: Tian Yi, Liang Jun)