The benchmark for Chinese loan pricing: the 1-year LPR anchors short-term corporate lending, the 5-year-plus LPR anchors mortgages. It sits mid-stream in the transmission chain — the 7-day reverse repo rate (the policy anchor) moves first, LPR follows, and the change then reprices actual credit loan by loan. The "benchmark" series are the legacy administered lending rates frozen since October 2015, useful as a pre-reform reference.
The Loan Prime Rate (LPR) is the market-based benchmark lending rate introduced in August 2019. The 1-year LPR guides short-term corporate lending, while the 5-year+ LPR serves as the reference for mortgage rates. The "Benchmark" series are the older PBOC-administered lending rates (贷款基准利率), frozen since October 2015 at 4.35% (1Y) and 4.90% (5Y+).
Why it matters: LPR adjustments signal the PBOC's monetary policy stance. Cuts to the 5-year LPR directly reduce mortgage costs and support the real estate sector — and since the 2024 bulk-repricing mechanism for outstanding mortgages, LPR cuts pass through to household cash flow faster than they used to. Since the 2024 rate-framework reform, LPR quotes key off the 7-day reverse repo rate — the MLF no longer serves as the policy rate — so the 7-day OMO rate is the leading indicator for LPR moves. The gap between LPR and the old benchmark rates measures the cumulative easing since the 2019 reform.