FOUR of China’s major banks said Thursday they will start to lower interest rates on existing mortgages for first-home loans, reducing them to levels in place when a home was purchased.

Industrial and Commercial Bank of China Ltd. (ICBC), China Construction Bank Corp., Agricultural Bank of China and Bank of China issued separate statements announcing the planned reduction.

The reduction will come into effect Sept. 25, they said.

Chinese brokerage China International Capital Corp. (CICC) expected the average reduction for first-home buyer’s mortgage rates would be 50 basis points (bps) and it could save them about 200 billion yuan (US$27.31 billion).

CICC estimated that loans to first-home buyers account for about 80%-90% of total outstanding mortgages.

Regulators announced the policy to help homebuyers last week amid several other support measures announced by the government in recent weeks.

The property sector accounts for roughly a quarter of the economy. China’s home loans totaled 38.6 trillion yuan (US$5.3 trillion) at the end of June, representing 17% of banks’ total loan books.

Currently, the national floor of first-home loans stands at 20 basis points below the benchmark lending rate 5-year Loan Prime Rate — currently 4.2%. Some big cities carry higher floor rates.  (SD-Agencies)