Understanding China's LPR Mortgage Rates in 2025

Note: This content is specific to the Chinese financial market.

If you are looking at property in China, forget about LIBOR or Prime. The king of interest rates here is the LPR (Loan Prime Rate).

Since the reforms of 2019, almost all new residential mortgages in China are priced based on the 5-Year LPR.

How is it calculated?

Your mortgage rate formula is: Mortgage Rate = 5-Year LPR + Basis Points (BP)

• LPR: Set monthly by the People's Bank of China (PBOC) based on quotes from 18 commercial banks.
• Basis Points (BP): The spread added (or subtracted) by your specific bank.

The Trend: Historical Lows

In an effort to revitalize the struggling property sector, the PBOC has been cutting the LPR aggressively.

• This means borrowing costs are at historical lows compared to the last decade.
• In many cities, the government has even removed the "floor" on mortgage rates, allowing banks to offer rates below the LPR (e.g., LPR - 20bp) for first-time buyers.

Repricing Day (Jan 1st)

Most mortgage contracts in China have an annual repricing clause. Usually, this happens on January 1st.

• If the LPR went down during the previous year, your monthly payment automatically drops on New Year's Day.
• This makes Chinese mortgages essentially "adjustable-rate mortgages" (ARM) with a 1-year fix.

Conclusion

The current monetary policy in China is loose, aimed at encouraging homebuyers. While property prices are volatile, the cost of debt is cheaper than it has been in a long time.

👉 China Mortgage LPR Calculator