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Mortgage Rates Declined for Third Consecutive Month in February 2019 Second-tier Cities Took the Lead in Rate Drop

Last month, we noted average mortgage rates for first-time homebuyers declined in seven cities. For the month of February, ten cities have recorded declines in the average mortgage rate for first-time buyers; of which Nanjing recorded the largest month-on-month drop by 20 basis points; Shenzhen and Nanning recorded second largest drop by 11 basis points. In this month, no city experienced consecutive month-on-month drops in mortgage rates and it is estimated that the consecutive rate declines are unlikely in the near term. Mortgage rates in unaffected cities during the recent trend in rate decline will most likely be affected as well, although the timing around these events and rate declines will vary from city to city.


1. National Average of First and Second Home Mortgage Decreased across the board

According to data from Rong360 Big Data Research Institute,  the average mortgage rate for first-home loans was 5.63% in February 2019,  1.149x of the benchmark lending rate, decreasing by 3 basis points from the prior month, and up 17 basis points from 5.46% in February 2018.

The average mortgage rate for second-home loans increased by 20 basis points from 5.79% to 5.99% in February 2019.


2. An Increased Number of Banks Reduced Mortgage Rates

According to data analytics by Rong360 Big Data Research Institute, among 533 bank branches nationwide, 2 increased mortgage rates for first-home loans in February, accounting for 0.38% of total banks. 44 banks reduced the mortgage rate for first-home loans, accounting for 8.26% of total banks, 10 more than in the prior month. 483 banks maintained the same rate level as in the prior month, accounting for 90.62% of total banks and 4 more than in the month prior.


3.  3 out of 4 First-tier Cities Continued to See Declines in Average Mortgage Rates

Among China’s first-tier cities, Shanghai, Guangzhou and Shenzhen followed the national trend seeing lower mortgage rates in February. Beijing, being the political center and under constant media watch, had its average mortgage rates remained unchanged in February.

Among the cities, Shanghai had the lowest average first-home mortgage rate in February at 5.06%, down 3 basis points from the prior month. Shenzhen had the largest rate drop of 11 basis points from the prior month to 5.46% in February. Beijing ranked #4 on the top 10 list of lowest mortgage rates for first-home loans, flat at 5.43% compared to the month prior, Guangzhou ranked 10th, decreasing 3 basis point to 5.52%.


4. Second-tier Cities Saw Rate Drop Across the Board; Led by Nanjing

Among second-tier cities, rate drop was seen across the board except for Chengdu. The biggest sequential decrease for first home mortgage rates was Nanjing by 20BP to 5.62%, secondly Nanning dropped by 11BP to 6.01%. Wuhan had the highest first home mortgage rates of 6.16%. The same rate for Hangzhou dropped by 6 basis points to 5.56%, Tianjin and Harbin remained flat at 5.48% and 5.74%, and Ningbo dropped by 7 basis points to 5.64%. 

Chengdu, being the exception of the bunch, had their second home mortgage rates remained unchanged for the month of February and first home mortgage rates sequentially rose, for 3 months in a row, to 5.69%.


5. The Downward Trends were Seen Across All Types of Banks. Foreign Banks had the Lowest Mortgage Rates while Joint-stock Banks had the Highest.

According to data analytics by Rong360 Big Data Research Institution, the lowest average mortgage rate for first-home loans among 19 major banks reached 1.080x of the benchmark interest rate, while the highest rate was 1.213x of the benchmark interest rate in February 2019.

Over the past 4 months, the downward trends in mortgage rates were seen across all types of banks. In February 2019, joint stock took the lead in first-home mortgage rates at 5.67%, 1.157x of the benchmark interest rate, while foreign banks had the lowest average first-home interest rate of 5.38%, 1.098x the benchmark interest rate.

Average Mortgage Rate for First-home Loans





State Owned Banks





Joint Stock Banks





City Commercial Banks





Rural Commercial Banks





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In summary:

On March 5, 2019, Premier Li Keqiang delivered a Government Work Report stating new guidelines for the real estate property industry. The guideline noted that China will better address people's housing needs, solidify the governance responsibility at a city level, implement reform to improve the housing market system and relative support systems, aimed at sustaining the steady and healthy development of the real estate market.

An official speaker from the China Banking and Insurance Regulatory Commission (CBIRC), recently stated there is no change in credit policy for real estate markets from CBIRC’s standpoint. CBIRC is committed to firmly tackling housing bubbles and preventing large fluctuations in housing values. This year, CBIRC will further implement differentiated mortgage policies. Which is to say, in the light of different local conditions, the banking system would continue credit support for the inelastic demand of first-time buyers and second-home demand in order to improve living conditions for buyers seeking affordable homes. However, CBIRC will maintain strict control of home loans for property buyers meant as an investment, or speculation, by increasing first down payment requirements and adjusting risk-value of interest rates.

The vice president of CBIRC also stated that it will continue to carry out stricter loan conditions for homebuyers and property developers. For 2019, the policy guidelines for real estate property markets are meant to further satisfy rational housing demand of homebuyers for inelastic first-home needs, as well as second-home needs for improved living conditions while conducting strict control on speculative purchase activities.

Therefore, given the financial risks in real estate property markets that are under control, it is estimated the supply of real estate in major cities will remain stable in 2019 and the mortgage rates will generally remain steady or decline slightly.

Mortgage Rates Declined  for Third Consecutive Month in February 2019 Second-tier Cities Took the Lead in Rate Drop Download Documentation