China Slashes Mortgage Rates to Revive Property Market

China's central bank has made its largest-ever cut to the key mortgage reference rate, reducing the five-year loan prime rate (LPR) from 4.2% to 3.95% in an effort to bolster the housing market amidst a prolonged property crisis. The move aims to reduce pressure on the property sector, which has been hobbled by a real estate downturn since 2021, triggering a liquidity crisis and defaults by major developers. China's economy also faces deflation, low confidence, accelerated capital flight, and a significant decline in foreign direct investment, reflecting growing concerns about political risks and economic outlook.