The price of new real estate in China is experiencing the biggest drop in the last 9 years, and additionally, the Shanghai stock market is recording its lowest value in the last 5 years.

The Chinese government aims to stimulate the real estate market as well as the entire economy with the announcement of the largest reduction in benchmark interest rates on mortgages to date.

The five-year primary interest rate has been lowered from 4.20% to 3.95%. Considering that their previous reductions affected the exchange rate and banks’ interest rates, they are more concerned about the economy, which is not performing well, and they must take action to change that.

Expectations are that the reduction in benchmark interest rates on mortgages will not affect banks’ net interest margins.

The real estate market has been hit by the crisis, and they want to stimulate the market by injecting additional liquidity.

Properties are too expensive, as are loan prices, so there are no buyers. Whether this measure will affect the real estate market in China and to what extent remains to be seen.