Latest Mortgage Rates for 2026
As of May 2026:
- 5-year+ LPR: 3.50%
- First-home provident fund rate: 2.6% (5yr+)
- Second-home provident fund rate: 3.075%
- First-home commercial rate: usually LPR − 30BP to LPR (3.20%–3.50%)
- Second-home commercial rate: usually LPR + 30–60BP (3.80%–4.10%)
Each bank sets its final rate as LPR plus/minus a spread; city, down payment and your credit all move the number.
Equal Monthly Payments (EMI) vs Equal Principal
EMI: the same payment every month — interest-heavy early, principal-heavy later. Suits salaried earners managing cash flow.
Equal principal: fixed principal with shrinking interest — payments fall monthly. Suits the cash-rich seeking minimum total interest.
Worked example: CNY 1M, 30 years, 3.50%
- EMI: CNY 4,490/month, CNY 617K total interest
- Equal principal: first month CNY 5,694, last CNY 2,786, CNY 526K total interest
- Gap: equal principal saves CNY 90K in interest, but front-loads the burden
The Golden Rule for Combined Loans
A combined loan = provident fund + commercial. The core rule: max out the fund quota first.
The fund rate (2.6%) sits far below commercial (3.50%+); every extra CNY 10K on the fund saves roughly CNY 1,800 in interest over 30 years.
Maximum fund quotas by city:
| City | Individual Max | Couple Max |
|---|---|---|
| Beijing | CNY 1.2M | CNY 1.6M |
| Shanghai | CNY 600K | CNY 1.2M |
| Guangzhou | CNY 600K | CNY 1M |
| Shenzhen | CNY 900K | CNY 900K |
How the LPR Float Moves
Commercial mortgages price as LPR + basis points (BP):
- Each Jan 1 (or loan anniversary), the payment is recalculated at the latest LPR
- Central bank cuts → next January's payment drops
- Central bank hikes → next January's payment rises
Since the 2020 LPR reform the rate has fallen repeatedly, from 4.65% to 3.50% — existing mortgages get each cut automatically, no action needed.
4 Common Mortgage Decision Traps
Trap 1: "EMI loses money". Truth: the totals differ, but EMI eases early pressure and is kinder to your lifestyle.
Trap 2: "the fund is wasted if you don't withdraw it". Truth: fund loans cost 30%+ less interest — one of the biggest perks.
Trap 3: "prepaying always wins". Truth: if your returns reliably beat the mortgage rate, not prepaying wins.
Trap 4: "the LPR switch was one-time". The 2020 batch conversion settled it; new contracts float by default.