China banks raise mortgage rates for first time since 2021

Move a surprise given the housing market remains in a slump

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BEIJING - Chinese banks have raised new mortgage costs for the first time in three years, as narrowing margins are dragged down by a persistent property slump and slowdown in the world's No. 2 economy.

The average mortgage rate for buyers' first homes in 42 big cities inched up to 3.08 per cent in November from a record low of 3.05 per cent in the previous month, the first increase since October 2021, according to data from Singapore-based firm Data Motion International Trading.

The move is surprising since the housing market remains mired in a slump that began three years ago and has rippled through the economy.

Property prices are still falling despite recent signs of an improvement in sales following a stimulus push that began in late September.

Chinese banks battling a record low net interest margin - a key measure of profitability - are under pressure to boost their books, which have become a constraint on the central bank's ability to further bring down interest rates.

Deeper cuts forecast for 2025 are set to intensify the challenge for lenders to find ways to deal with declining loan rates.