Banks may be forced to cut mortgage rates

Guangdong Huaxing Bank said Sunday it will offer a 30 percent discount for first home buyers applying for mortgages, the first bank to lower mortgage rates after the central bank announced June 7 its first cut in benchmark interest rates in three years, Oriental Morning Post reported.

Guangdong Huaxing Bank stressed that it will continue to strictly enforce the policy of increasing the benchmark interest rate by 1.1 times for second home buyers.

The newspaper said for most banks, including State-owned ones, the maximum discount for first home buyers remain at 15 percent by Sunday.

But a staff member at the Shanghai branch of a State-owned bank told the newspaper that his or her bank may adjust the mortgage discount rate to 20 percent within this week.

Another insider noted that the cost of capital for different banks has led to the different discount rates. However, if one bank lowers the mortgage interest rate, others will follow the trend.