Latest rules to lock lower limits for mortgage rate

Chinese mortgage loans will become one of the most expensive types of commercial bank lending from next month, and it will be difficult for house buyers to get discounts on the borrowing cost, due to the new interest rate calculation method set by the central bank, analysts said.

Starting from Oct 8, residents who need to borrow money for purchasing new houses should re-calculate the mortgage loan rate based on a new rule announced by the People's Bank of China, the central bank, late on Sunday.

The new rule has locked the rate's lower limits: for the first house, individual borrowers will pay an interest rate no less than the loan prime rate (LPR) with the same maturity. For the second house, the lowest borrowing cost is 0.6 percentage point above the LPR, said a statement on the PBOC website.