China plans mortgage rate cuts to support banks and boost economy

06 Sep 2024 CW Team

The proposal, still awaiting approval from top leadership, may apply to both first and second homes. Chinese regulators, who set mortgage rate benchmarks for banks to follow, are attempting to revitalise the ailing property market without undermining the country's $66 trillion financial system. Banks are already facing squeezed profit margins, which fell to a record low of 1.54% as of June 2024, well below the threshold of 1.8% needed for sustainable profitability.

Regulators are also expected to introduce measures allowing homeowners to renegotiate terms with their current lenders before banks usually reprice mortgages in January. For the first time since the global financial crisis, borrowers may be able to refinance with a different bank.

Analysts from China International Capital Corp and Jefferies Financial Group have predicted mortgage rates could drop by up to 100 bps in some cities. The mortgage rate cuts are seen as part of efforts to address the economic slowdown, with concerns heightened after weak earnings from major consumer companies and growth downgrades from global banks.

Larry Hu, Head- China Economics, Macquarie Group, noted that the cuts would essentially transfer wealth from banks to households, potentially boosting consumption. He estimated that refinancing existing mortgages could save borrowers around 300 billion yuan annually, equivalent to 0.6% of China's retail sales or 0.2% of its GDP.

However, the cuts pose risks to banks, with Citigroup estimating an 8-bp contraction in margins and a potential 6.4% hit to earnings next year, particularly for major state-run banks with significant mortgage exposure. As of the end of 2023, existing mortgages had an average interest rate of 4.27%, compared to the record low of 3.45% on newly-issued loans.

(ET)

China is considering reducing interest rates on up to $5.3 trillion worth of mortgages in a bid to lower borrowing costs for millions of families while minimising the strain on its banking sector. Financial regulators have proposed cutting mortgage rates by about 80 basis points (bps) in two phases, with the first reduction expected in the coming weeks and the second in early 2025, according to sources familiar with the plan. The proposal, still awaiting approval from top leadership, may apply to both first and second homes. Chinese regulators, who set mortgage rate benchmarks for banks to follow, are attempting to revitalise the ailing property market without undermining the country's $66 trillion financial system. Banks are already facing squeezed profit margins, which fell to a record low of 1.54% as of June 2024, well below the threshold of 1.8% needed for sustainable profitability. Regulators are also expected to introduce measures allowing homeowners to renegotiate terms with their current lenders before banks usually reprice mortgages in January. For the first time since the global financial crisis, borrowers may be able to refinance with a different bank. Analysts from China International Capital Corp and Jefferies Financial Group have predicted mortgage rates could drop by up to 100 bps in some cities. The mortgage rate cuts are seen as part of efforts to address the economic slowdown, with concerns heightened after weak earnings from major consumer companies and growth downgrades from global banks. Larry Hu, Head- China Economics, Macquarie Group, noted that the cuts would essentially transfer wealth from banks to households, potentially boosting consumption. He estimated that refinancing existing mortgages could save borrowers around 300 billion yuan annually, equivalent to 0.6% of China's retail sales or 0.2% of its GDP. However, the cuts pose risks to banks, with Citigroup estimating an 8-bp contraction in margins and a potential 6.4% hit to earnings next year, particularly for major state-run banks with significant mortgage exposure. As of the end of 2023, existing mortgages had an average interest rate of 4.27%, compared to the record low of 3.45% on newly-issued loans. (ET)

Infrastructure Urban

04 May 2026

Jyoti Structures FY26 profit rises 56.5%

Jyoti Structures (JSL) recently reported strong financial results for the quarter and year ended 31 March 2026, driven by disciplined execution, cost management and steady progress across its order book.For Q4 FY2025-26, total income rose 44.2 per cent to Rs 2.41 billion from Rs 1.67 billion in Q4 FY2024-25. EBITDA increased 58.6 per cent to Rs 237 million, while EBITDA margin improved by 89 basis points to 9.84 per cent. Profit before tax grew 53.3 per cent to Rs 188.5 million, and net profit rose 51.9 per cent to Rs 181.4 million.For FY2025-26, total income grew 53.1 per cent to Rs 7.72 bill..

Infrastructure Energy

04 May 2026

Cat BEPU to Power Doppstadt Separator at IFAT 2026

Caterpillar’s Cat Battery Electric Power Unit (BEPU) has been selected by Doppstadt to power its SWS 6 Spiral Shaft Separator, which will be showcased for the first time at IFAT 2026 in Munich, Germany, from 4–7 May.The compact plug-and-play BEPU is designed to replace a diesel engine within the same space, using the same mounting locations and relative machine position. It integrates the battery, motor, inverter, onboard charging, cooling and controls, enabling OEMs to electrify existing chassis platforms without extensive redesign.Caterpillar and Cat dealer Zeppelin Power Systems have be..

Infrastructure Urban

04 May 2026

VECV sales rise 6.9% in April 2026

VE Commercial Vehicles, a joint venture between Volvo Group and Eicher Motors, recorded sales of 7,318 units in April 2026, compared to 6,846 units in April 2025, registering 6.9 per cent growth. The total included 7,159 units under the Eicher brand and 159 units under the Volvo brand.Eicher branded trucks and buses reported sales of 7,159 units during the month, up 6.6 per cent from 6,717 units in April 2025. In the domestic commercial vehicle market, Eicher sales rose 8.6 per cent to 6,797 units from 6,257 units a year earlier.Exports declined 21.3 per cent, with VECV recording 362 units in ..