China’s banks set to trim loan rates to bolster borrowing: report

This comes after new yuan loans in July fell to just a quarter of the amount in June.

Chinese banks are expected to cut back their benchmark loan prime rates in a bid to spur borrowing, reports Bloomberg.

Chinese banks extended $101b (CNY679b) in new yuan loans in July, according to data from the People’s Bank of China (PBOC)--less than a quarter of the amount of loans they extended in June.

Economists polled by Bloomberg now expect the one-year loan prime rate -- the de facto benchmark lending rate for banks --to be cut by 10 basis points to 3.6%. That would be the first reduction in that rate since January.

Meanwhile, the five-year LPR, used as a reference for mortgage costs, may be cut between 10-basis points to 4.35%, or even by another 15 points, doubling the cut earlier in May.

Chinese banks’ loans have come under pressure in recent months, especially amidst reports of mortgage boycotts that may push up defaults the longer it persists, and ongoing COVID-19 struggles.

Here’s more from Bloomberg:

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