SHANGHAISINGAPORE, Feb 20 Reuters China announced its biggest ever reduction in the benchmark mortgage rate on Tuesday, as authorities sought to prop up the struggling property market and broader economy.

The 25basis point cut to the fiveyear loan prime rate LPR was the largest since the reference rate was introduced in 2019 and far more than analysts had expected.

This is the biggest signal. In other words, the largest interest rate cut cycle in history has begun, said Yan Yuejin, analyst at EHouse China Research and Development Institution. The cut will directly impact the real estate sector by lowering mortgage costs, he said.

The fiveyear loan prime rate LPR was lowered by 25 basis points to 3.95 from 4.20 previously, while the oneyear LPR was left unchanged at 3.45.

Most new and outstanding loans in China are based on the oneyear LPR, while the fiveyear rate influences the pricing of mortgages.

In a Reuters poll of 27 market watchers conducted this week, 25 expected a reduction to the fiveyear LPR. They projected a cut of five to 15 basis points.

The deeperthanexpected cut also suggests Beijing is no longer as concerned about the negative effects of lower lending rates on the currency or banks as they were last year.

A central bankbacked newspaper said on Tuesday that the benchmark mortgage rate cut would not create a negative impact on banks39; net interest margins.

At the same time, diminished spillover effects from other major economies, particularly the…