THE INTEREST RATE IS OF COURSE OF HIGH INTEREST TO THOSE APPLYING FOR A MORTGAGE. IT SHOULD BE MADE CLEAR HERE THAT THE BANK’S BENCHMARK INTEREST RATE ON MORTGAGES FOLLOWS THE LPR RATE OF THE CENTRAL BANK. SO, A QUESTION EMERGES: WILL BANKS AUTOMATICALLY ADJUST INTEREST RATES WHEN THEY FALL? SPECIFICALLY, IT DEPENDS ON WHETHER YOUR MORTGAGE IS FIXED OR FLOATING。

How does the floating rate differ from the fixed rate

If your loan contract is signed at a floating rate of interest, the rate will be adjusted in the following year in the light of fluctuations in the loan base rate. On the contrary, if the loan contract is entered into at a fixed rate of interest, the interest rate within the contract remains the same regardless of the change in the loan base rate。

You might ask, what's the difference between fixed and floating interest rates? Basically, fixed interest rates are interest rates that do not change during the loan period, while floating interest rates can be adjusted during the loan period. Fixed interest rates are easy to plan in a stable economic environment, with a defined expectation of financing costs. However, in cases of severe inflation, fixed interest rates are beneficial to borrowers and unfavourable to lenders。