On Thursday morning, January 20, China lowered its benchmark interest rate Mortgage Loans, for 1 year and 5 years for the first time in 2 years.
This came, after the decisions of the “Central Bank of China” to cut interest rates on short and medium-term loans, and it also comes days after the Deputy Governor of the Central Bank announced its readiness to take further measures in the future, in a direction for the monetary authorities to enhance their efforts to support the slowing economy, after it Data earlier this week indicated a bleak outlook for the country’s troubled real estate sector, according to Bloomberg News.
And in a monthly briefing to determine interest rates, today, Thursday, it cut China base interest rate On one-year loans, it reduced ten basis points to 3.70% from 3.80%, and lowered the basic interest rate on five-year loans by five basis points to 4.60% from 4.65%, the first such cut since April 2020.
It is reported that, most of the financing channels were unable to help Chinese developers who are suffering from financial stress. Yields on China’s risky dollar debt are up 20% this month, making overseas markets very expensive. Weaker companies will struggle to sell debt to risk-averse local investors. When Sunak China Holdings tapped stock investors instead last week, its shares plunged a record 23% in Hong Kong.
Providing liquidity has become more difficult. At the end of last year, a number of major cities in China and some smaller municipalities tightened controls over the use of proceeds from previously sold property. m goes downHome sales and prices, according to official data. Many major Chinese banks have become more selective about financing real estate projects, through local government financing mechanisms.