Recent reports have emerged that mortgage rates in some cities have dipped below 3%, entering the "2% range." On the 7th, inquiries with banks and real estate agents revealed that sub-3% mortgage rates are limited to specific promotions offered by a few foreign banks in certain regions, while the national mainstream mortgage rate is still firmly entrenched in the 3.0% to 3.1% range.

A bank employee at HSBC's Guangzhou branch in Guangdong Province stated that their current mortgage rate is 2.7%, but noted that this rate is subject to change and requires consultation with a mortgage business manager. Meanwhile, staff at branches of China Construction Bank and Bank of China in Guangzhou confirmed that the mortgage rate in the Guangzhou area is the 5-year LPR minus 50 basis points, applicable to both first and second homes. Based on the 5-year LPR of 3.5% announced on July 20, the rate from these two banks is 3.0%.

Beyond Guangzhou, reports indicate that a loan officer at an HSBC branch in Hangzhou's Gongshu District stated that the minimum mortgage rate for both first-time and second-hand homes is 2.76%, which is the 5-year LPR (3.5%) minus 74 basis points. A local Beike Zhaofang staff member confirmed that the general mortgage rate in Hangzhou is 3.05%, with no distinction between first and second homes, though they added that smaller banks might offer lower rates upon application.

Dong Ximiao, Chief Economist at Lianhe Credit Rating, analyzed that the ultra-low 2.7% mortgage rate offered by HSBC in Hangzhou and Guangzhou is a targeted market and risk management strategy, not a universal concession. With the current 5-year LPR at 3.5% and the removal of the national mortgage rate floor, banks can adjust their point spreads, allowing HSBC to lower the rate to 2.7%. Dong Ximiao believes this is a "price war" focused on high-quality clients. In the current environment of "asset shortage," HSBC is strategically using low interest rates to attract high-net-worth individuals with excellent credit, prioritizing asset quality over broad market share.

Dong Ximiao further explained that foreign banks have greater flexibility in rate pricing, but the eligibility for this low rate is likely stringent, targeting specific partner channels and requiring strict approval, making it difficult for the average borrower to access. Most homebuyers will still be able to secure rates around 3.0%, the mainstream market level. Therefore, the 2.7% rate is a competitive "special case" reflecting the flexible operational advantages of foreign banks, not a signal of a general downward trend in mortgage rates.

What scenarios lead to mortgage rates below 3%?

Beyond the limited cases of a few banks in specific areas, other scenarios can result in sub-3% mortgage rates. These include: existing mortgages with significant downward interest rate adjustments; provident fund loans or combined commercial-provident fund loans; and city-specific mortgage interest subsidy policies.

For existing mortgages, one borrower reported that after converting to the LPR benchmark, their rate became LPR minus 88 basis points. Following multiple LPR cuts, their current rate is 2.62%. Additionally, for short-term 5-year loans tied to the 1-year LPR (currently 3.0%), the rate can drop to around 2.5% after repricing.

For provident fund loans, the current rates for first-time home purchases are 2.1% for terms of 5 years or less and 2.6% for terms over 5 years. For second homes, the rates are at least 2.525% and 3.075%, respectively.

Some cities have also implemented mortgage interest subsidies. For example, Nanjing recently announced a policy offering a 1% subsidy on the total loan amount for homebuyers who complete a "sell old, buy new" transaction before December 31, 2026, with a total fund cap of 100 million yuan. This subsidy effectively reduces the mortgage rate from 3.0% to approximately 2.85% when amortized over 30 years. Similarly, Taizhou city in Jiangsu offers a 2% annual financial subsidy (up to 20,000 yuan per year) for two years on the loan amount for young talents buying their first new home in the urban area.

Mortgage rates are at historic lows.

Data from the People's Bank of China shows that the new personal housing loan rate in June was approximately 3.1%, flat year-on-year. According to the Shanghai E-House Real Estate Research Institute's report, commercial loan rates for first homes in 36 key cities are concentrated in the 3.0% to 3.1% range. A rate of 2.95% has appeared in some cities, but this is typically linked to specific short-term promotional policies from banks.

Yan Yuejin, Vice President of the Shanghai E-House Real Estate Research Institute, noted that the overall cost of mortgage rates is at a historically low level. He cautioned against overstating the market impact of rates even if they drop to 3% or below. Yan Yuejin believes that mortgage interest subsidies may be more effective, as they directly alleviate repayment pressure for the next one to two years, providing tangible monthly savings.

Overall, the basic tone of mortgage rates across regions remains stable. However, based on the actual needs of stabilizing the real estate market, moderate adjustments and innovations in mortgage subsidy policies are possible. Dong Ximiao also suggested implementing a financial subsidy for first-home personal housing loans, significantly reducing or even temporarily canceling taxes on housing transactions to lower housing consumption costs. This could boost residents' willingness and ability to buy homes, effectively stabilizing the real estate market.