China central bank sets rules on mortgage rates after reform

China’s central bank issued detailed rules on Sunday on   interest rates on mortgage loans, following its reform to switch to a  market-based reference rate for pricing new loans. Effective from  Oct. 8, banks will set individual housing loans based on the new loan  prime rate (LPR), the People’s Bank of China said in a statement  published on its website.

The interest rate on individual  mortgage loans for first-time home buyers cannot be lower than the LPR,  and the rate on loans for second-time home buyers cannot be lower than  the LPR plus 60 basis points, the central bank said.