BEIJING : China has been cutting mortgage rates since last year to boost sales in its moribund property market, but the main result so far has simply been a rush by households to pay off existing mortgages early, potentially squeezing banks' profits.
It also highlights, however, how mortgage rate cuts and other measures to aid China's faltering property sector, hit by a slump in demand and a cash crunch at major developers, have yet to deliver a meaningful recovery, even as recent data show the market is stabilising. Analysts expect a recovery will only kick in towards the second half of this year.
Towards the middle of last year, however, regulators began lowering benchmark mortgage rates to prop up property demand, after a liquidity crisis among developers sent home prices and sales into a downward spiral. "I decided to do so because I'm burdened with a mortgage rate that's too high," Wang said. He declined to give his full name due to the sensitivity of the matter.