The provident fund loan interest rate is approaching a historical low point. Is there still room for further reduction?

Yan Yuejin, deputy director of the Shanghai E-house Real Estate Research Institute, pointed out that the current first home mortgage rate is close to a historical low, and there is relatively limited room for further cuts. From the perspective of the overall interest rate environment and the policy orientation of the provident fund system, further cuts are not impossible, but not urgent. The possibility of further cuts is more likely to depend on the macro interest rate environment and the progress of the real estate market recovery. From the perspective of banks, Lou Feipeng believes that the continuous narrowing of interest rate spreads means that commercial mortgage loan rates still face downward pressure, especially in cities where the amount of provident fund loans is relatively sufficient. Some home buyers may prioritize the use of provident fund loans, leading to a diversion of commercial mortgage loans and squeezing the bank's interest income space. However, the industry generally believes that future housing mortgage rates are expected to decline. Wang Qing, chief macro analyst at Orient Securities, predicts that the central bank will cut interest rates twice in 2026, with a magnitude of 20-30 basis points each time, preliminarily judging once in the first half of the year and once in the second half. At the same time, from the perspective of stabilizing the real estate market, there is a possibility in 2026 to implement targeted interest rate cuts for residential mortgages by significantly lowering the 5-year LPR. Zhang Ning, senior China economist at UBS Investment Bank, points out that from the policy logic, if future policy interest rates are further cut by 20 basis points, there is a possibility of mortgage interest rate cuts by 30-40 basis points. However, he also emphasizes that interest rate adjustments still need to strike a balance between stabilizing bank interest spreads and preventing financial risks, and relevant policies are still in the discussion and demonstration stage.