Unchanged for the 13th consecutive month! China’s latest LPR announced: 3.5% for over-5-year term, 3% for 1-year term.
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China’s Loan Prime Rate (LPR) for June was released on June 22, with both the 1-year and over-5-year LPR remaining unchanged.
According to the National Interbank Funding Center authorized by the People’s Bank of China, the Loan Prime Rate (LPR) on June 22, 2026, is: 1-year LPR at 3.0%, and over-5-year LPR at 3.5%. These LPRs will remain effective until the next LPR announcement.
The 7-day reverse repo rate, the main policy rate, has remained unchanged for 13 consecutive months since its last cut in May 2025. Thus, the pricing basis for the LPR has not changed this month. The last LPR adjustment was in May 2025, when both the 1-year and over-5-year LPR were lowered by 10 basis points.
At the recent 2026 Lujiazui Forum, Pan Gongsheng, Governor of the People’s Bank of China, mentioned that to further promote the transition of the monetary policy framework toward price-based tools and enhance the precision and effectiveness of short-term interest rate regulation, further exploration and optimization of the interest rate regulation mechanism will be conducted:
On one hand, building on the establishment of the temporary overnight repo/reverse repo tool in July 2024, the usage mechanism will be improved, and the operational rate will be adjusted to the 7-day reverse repo rate plus or minus 25 basis points, narrowing the range from 70 basis points to 50 basis points; on the other hand, the open market operation toolkit will be further enriched, with the timely addition of overnight reverse repo operations to better match the temporary liquidity needs of the banking system.
From a pricing perspective, since the 7-day reverse repo rate was reduced to 1.40% in May 2025, it has remained unchanged, and the Medium-term Lending Facility (MLF) rate has also remained stable, leaving the LPR without direct policy impetus to fall. Additionally, bank net interest margins are clearly under pressure, falling to a historic low of 1.40% at the end of Q1 2026, resulting in limited motivation for banks to compress their LPR quotation spreads and lower the LPR.
Galaxy Securities believes that the shift from ultra-loose to tightened liquidity may be nearing its end, with a reduced probability of further significant tightening ahead. The broader environment of ample medium- and long-term liquidity will not change, and with the central bank announcing a narrowing of the overnight interest rate corridor and other operations to stabilize current funding rates combined with more flexible and precise liquidity injections, future central bank actions and signals are still worthy of close attention.
Although the current LPR remains stable, the market generally believes that the over-5-year LPR is still the main focus for possible rate cuts in the second half of the year. Analysis indicates that stabilizing the real estate sector remains an important focus of macro policy. If housing market sales and price recoveries continue to be weak, it is possible to further lower mortgage rates by cutting the over-5-year LPR, which would ease existing debt pressures and boost confidence in homebuying.
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