SHANGHAI, (Reuters) – China lowered its benchmark mortgage rates for Thursday in an effort to boost the economy’s slowing growth. This was after earlier data showed a worsening outlook for China’s property sector.

Following unexpected reductions by China’s central bank Monday to its medium- and short-term lending rates rates on Monday, this cut was made to the five-year and one-year loan prime rate (LPR). It came only days after China’s vice governor had suggested more actions.

Many analysts believe that easing will become necessary as the downturn in the property sector continues into 2022, and Omicron’s fast-spreading variant is dampening consumer activities. This, even though other major economies such as the United States appear to be tightening monetary policy.

Data from December showed that consumption and the property market continued to decline, two of the major drivers for growth.

China reduced its one-year loan rate (LPR), at a monthly fix on Thursday by 10 basis points, to 3.70% from the previous 3.80%. From 4.65%, it was the first time since April 2020 that its five-year LPR had been lowered by five basis points to 4.60%.

China’s central bank should “hurry up”, Liu Guoqiang, vice governor of People’s Bank of China said Tuesday. He raised expectations that more stimulus will be provided by the Chinese government.

In a snap Reuters survey, 43 people predicted a decrease in the one year LPR for a second month. 40 of them also predicted a decrease in the rate for five years.

Marco Sun, chief financial analyst for MUFG, stated that the Chinese authorities were keen to reduce the cost of credit borrowing. Accordingly, total credit growth should rebound following the Spring Festival.

China’s monetary policy has room to ease in the second half of the year. This will depend on both the policy transmission effect, and the annual parliamentary meeting in march.

Following the LPR Cut, property firms saw their shares and bonds rise on Thursday. Investors believed it would reduce the financial pressure in the sector which has witnessed a rising number of developers defaulting on debt.

Sheana Yue (China economist, Capital Economics) expects another 20 bps reduction to the one year LPR in half-year.

The LPR is based on the interest rates for medium-term loans facilities (MLF). According to market participants, moves towards the LPR should mirror adjustments to MLF rates.

China’s one-year LPR rate is used for most new and existing loans. Pricing of mortgages is affected by the five-year LPR.