Commercial rate = LPR + spread
Bank mortgage rates are the Loan Prime Rate (LPR) plus a bank-specific spread. The LPR is published on the 20th of each month (next business day if a holiday), and mortgages usually reference the over-five-year LPR.
The spread can be negative. Since the national floor on mortgage rates was scrapped in May 2024, cities and banks set it themselves. According to the People’s Bank of China, new individual mortgages carried about 3.1% in June 2026, below the five-year-plus LPR of 3.5%. Actual rates vary by city, bank and whether it is a first home.
The spread agreed in the contract normally stays fixed, and LPR changes take effect on the repricing date (usually 1 January or the loan anniversary). So when the LPR falls, your payment drops only from the next repricing date.
| From | 1-year LPR | 5-year-plus LPR |
|---|---|---|
| February 2024 | 3.45% | 3.95% |
| July 2024 | 3.35% | 3.85% |
| October 2024 | 3.10% | 3.60% |
| May 2025 – October 2026 fixing | 3.00% | 3.50% |
Unchanged at 17 consecutive fixings from the May 2025 cut through the 20 October 2026 fixing. It may change at any monthly fixing, so check the latest value.
Housing fund loans and combination loans
People who have paid into the housing fund for a set period can borrow from it at lower rates. Limits are set by each city and depend on contribution history, balance and income.
If the housing fund limit is not enough, the rest can come from a commercial loan in a “combination loan”. For example, 1 million yuan split into 600,000 from the fund (2.6%) and 400,000 commercial (3.05%), repaid in equal instalments over 30 years, costs about 2,402 + 1,697 = 4,099 yuan a month.
| Type | Up to 5 years | Over 5 years |
|---|---|---|
| First home | 2.1% | 2.6% |
| Second home | At least 2.525% | At least 3.075% |
Rates applied from 8 May 2025. In most cities, housing fund loans issued before then moved to the new rates on 1 January 2026 (details vary by city).
Equal instalments vs equal principal
With equal instalments you pay the same amount every month; with equal principal you repay the same principal each month plus interest on the remaining balance. Equal principal costs more at first but reduces the balance faster and costs less interest overall.
Equal instalment payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1) Equal principal payment = P ÷ n + remaining principal × r (P = loan amount, r = annual rate ÷ 12, n = number of months)
| Example (1 million yuan, 30 years) | First month | Last month | Total interest |
|---|---|---|---|
| Commercial 3.05%, equal instalments | 4,243 yuan | 4,243 yuan | About 528,000 yuan |
| Commercial 3.05%, equal principal | 5,319 yuan | 2,785 yuan | About 459,000 yuan |
| Housing fund 2.6%, equal instalments | 4,003 yuan | 4,003 yuan | About 441,000 yuan |
| Housing fund 2.6%, equal principal | 4,944 yuan | 2,784 yuan | About 391,000 yuan |
Assumes the rate stays the same for 30 years. In reality commercial loans reprice with the LPR on each repricing date.
Prepayment: shorter term or lower payment
When you repay part early, you usually choose between keeping the payment and shortening the term, or keeping the term and lowering the payment. For the same amount, shortening the term saves more interest.
Apply in the bank’s app or at a branch; when demand is high you may need to book and wait. Prepayment penalties differ by contract, so check your loan agreement.
People usually compare prepayment with other uses of the money, such as deposit interest or an emergency fund. The further the loan rate is above the deposit rate, the more interest prepayment saves.
| Example: 200,000 yuan prepaid after 5 years | Payment afterwards | Remaining term | Interest afterwards |
|---|---|---|---|
| No prepayment | 4,243 yuan | 300 months | About 383,000 yuan |
| Shorter term | 4,243 yuan | 211 months | About 201,000 yuan |
| Lower payment | 3,289 yuan | 300 months | About 297,000 yuan |
1 million yuan, 30 years, 3.05%, equal instalments; after 5 years (60 months) the balance is about 890,000 yuan, and 200,000 yuan is prepaid.
Minimum down payment and purchase rules
- Commercial loan down payment: Cut to 15% for a first home and 25% for a second in May 2024, then unified at no less than 15% for both under a September 2024 notice. Cities may set a higher floor.
- Housing fund loan down payment: Set by each city; many require around 20% for a first home (varies by city, to be confirmed).
- “Count homes, not loans”: Since August 2023, if you own no home in the city where you buy, you can be treated as a first-time buyer even if you had a previous mortgage.
- Purchase restrictions: Many cities have lifted purchase limits, but parts of Beijing, Shanghai, Shenzhen and others still require hukou or a period of social insurance contributions (as of 2026, to be confirmed).
Cuts on existing mortgages (2023–2024)
In September 2023 borrowers with existing first-home loans could negotiate with banks to lower their rate to the level of new loans.
Following the People’s Bank of China announcement of 29 September 2024, banks lowered existing loans (first and later homes) whose spread was above LPR −30bp to around LPR −30bp in a batch before 31 October 2024. Most were adjusted on 25 October without any application, cutting rates by about 0.5 percentage points on average.
Since 1 November 2024, borrowers can negotiate the spread and repricing period with their bank, so they can ask for an adjustment instead of refinancing elsewhere when the gap grows.
FAQ
Does my payment drop as soon as the LPR falls?
No. The LPR just before your contractual repricing date (usually 1 January or the loan anniversary) is applied then. Since November 2024 the repricing period can be renegotiated with your bank.
Can anyone get a housing fund loan?
Most cities lend to people who have paid into the fund normally for a set period (for example, six consecutive months or more). Limits and conditions follow the city’s housing fund centre rules.
Should I choose equal instalments or equal principal?
Look at your ability to pay in the first years together with total interest. Equal principal costs more early on but less interest overall; equal instalments keep payments level and easier to plan.
Can foreigners get a mortgage in China?
Some banks lend to foreigners who work in China and are eligible to buy, but income proof, length of stay and other conditions differ by bank and city.