BEIJING: China's central bank has slashed its mortgage rate as officials work to support the crisis-hit property market. The People's Bank of China (PBOC) cut the 5-year loan prime rate (LPR) by 1.5 percentage points, which matches its biggest cut on record, as per BBC report.

The world's second-largest economy encounters a property crisis that has witnessed some building projects grind to a halt.

Lockdowns brought on by the nation's rigorous zero-Covid regulations are also having an impact on businesses and customers. The PBOC lowered the five-year rate to 4.2% on Monday, which will lower the cost of mortgage payments across the nation.

It also slashed the one-year loan prime rate, which is usually used to determine corporate loans, from 3.7 percent to 3.65 percent. The actions are a part of a larger initiative to support the real estate market, according to Iris Pang, Greater China Chief Economist at ING Bank. She said in a message on Monday that "concurrently, some local governments have started to lend to property developers to continue the construction of uncompleted dwellings."

Together, the two actions should allay the worries of current home mortgage borrowers. According to the BBC, China's property crisis is thought to have reduced the value of the sector by more than a trillion dollars last year.

According to official figures, home sales in China have declined for 11 straight months. Since China established a private property market in the late 1990s, that is the longest recession. A number of Chinese developers have put a stop to construction on houses that have already been sold due to financial worries.

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