China’s anticipated cut to rates on existing mortgages marks one of the most concrete actions yet to boost the beleaguered economy, though it likely won’t be enough on its own to shore up growth.
That’s according to several economists after Bloomberg News reported Tuesday that the nation’s largest lenders are preparing to cut interest rates on existing mortgages and deposits. The state-directed measures mark the latest push by Beijing to spur consumer spending, juice the stock market and ease pressure on bank profit margins as the world’s second-largest economy loses steam.
The mortgage rate reductions would impact most of the nation’s 38.6 trillion yuan ($5.3 trillion) worth of outstanding mortgages. That should support household purchasing power and lift the gross domestic product growth rate by 0.1 to 0.2 percentage points, according to Bloomberg Economics. They estimate the easing is equivalent to a cut in the policy interest rate of five-to-10 basis points.
Read the full story on Bloomberg here.