Property prices, deposit rates up after rate cut

A housing project in Nanjing, capital of East China's Jiangsu province, Sept 21, 2014. [Photo/Asianewsphoto]

Deposit rates are edging up and housing prices in first-tier cities are rebounding one month after the central bank cut the benchmark interest rate, reported China News Service on Monday.

While Beijing Bank, Minsheng Bank, SPD Bank and Industrial Bank raised deposit rate to 1.1 times of the benchmark, CITIC Bank and Bank of Ningbo, along with Beijing-based four State-controlled peers boosted their offer to the 3.3 percent ceiling.

To stimulate the economy, the People's Bank of China announced a rate cut on Nov 21 for the first time in more than two years. The one-year lending rate fell 40 basis points to 5.6 percent and deposit rate down 25 bps to 2.75 percent.

At the same time, the central bank loosened the maximum interest rate banks can pay depositors to 20 percent over the benchmark from 10 percent.

The property market has shown signs of stabilization since the rate cut, as decline of housing price eased in November.

Price dropped month-on-month in 67 of the 70 cities tracked by the government, compared with 69 in October, with the largest price fall among them dropping from 1.6 percent to 1.4 percent, figures released by the National Bureau of Statistics showed on Thursday.

"The rate cut should spur residential property sales in the next few months in conjunction with the PBOC's mortgage policy relaxation," said Franco Leung, senior analyst of Moody's, in a report in November.

The Moody's expects nationwide residential property sales will decline less than 5 percent year-on-year, which is "weak but less dramatic than the 9.9 percent decline recorded during the first 10 months of 2014".

Chinese stocks advanced to a three-year high three days after the rate cut. The benchmark Shanghai Composite Index rallied to its highest level since November 2010 and closed at 3,108.6 on Friday.