The People's Bank of China announced the retention of the loan rate for one year for first-class borrowers (LPR)* at the level of 3.35% in the coming month. The interest rate on loans for five years will also remain unchanged at 3.85%. The LPR, adjusted on the 20th of each month, has a significant impact on the cost of loans for companies and individuals. Reducing this rate can stimulate economic activity, as it makes loans more affordable. In 2023, the LPR has already decreased twice: in June to 3.55% and in August to 3.45%, and in 2024 — once, in July, to 3.35%. The rate on debt obligations for five years, in particular, determines the cost of mortgage lending. In 2023, it changed once, falling to 4.2% in June, and twice this year: in February to 3.95% and in July to 3.85%. The LPR regulatory mechanism in China was upgraded in August 2019. It is determined monthly by the All-China Interbank Lending Center based on proposals from 18 key commercial banks in the country. * First-class borrowers are considered to be enterprises with a stable financial position and a high rating.
