China's Mortgage Rate Cut May Have Limited Impact on Housing Market

The recent 25 basis points cut in China's five-year loan prime rate (LPR) was met with mixed reactions in the market. While it was not a big surprise, the extent of the cut was greater than expected. Analysts believe that this cut, which affects the mortgage rate, aims to stimulate China's housing market. However, there are doubts about its effectiveness due to weak sentiment in the market, especially in lower-tier cities, and oversupply in the housing market. Furthermore, banks are concerned about the narrowing of their interest margins as a result of the rate cut.