BEIJING (BLOOMBERG) - China's central bank cut the lower-bound range of mortgage interest rates for first-time homebuyers amid a persistent slump in the property market.

The minimum mortgage rate has been reduced to 20 basis points below the corresponding tenors of loan prime rate (LPR), the de facto benchmark lending rate, the People's Bank of China (PBOC) said in a statement.

Most mortgages are longer than five years and pegged to the five-year LPR - at 4.6 per cent now - so the new floor is effectively 4.4 per cent.

The change is to support housing demand and "promote the stable and healthy development of the property market", the PBOC said, reiterating that "housing is for living in, not speculation".

The minimum mortgage rate for buyers of second homes is unchanged.

The cut follows a slump in household lending indicated by official data released on Friday, with mortgages contracting by 60.5 billion yuan ($8.9 billion) last month.

Home sales continued to plunge across major cities at the beginning of this month, after combined sales by the top 100 developers halved in the first four months of the year.

The PBOC said it will guide banks in each city to set their own minimum rates on top of the national requirement.

Banks in more than 100 cities have cut mortgage rates by 20 to 60 basis points since March, officials said last month.

Mortgages can also be pegged to the one-year LPR, which is 3.7 per cent, if their length is only one year.

The PBOC last set the LPRs as the minimum mortgage rates in 2019 during a reform to liberalise interest rates. Before that, the central bank cut the benchmark lending rate for loans above five years in 2015.

Some analysts are expecting banks to reduce the LPRs at the end of next week, after the central bank guided them to lower deposit rates, which led to lower funding costs. The rates were last cut in January following a reduction in the PBOC's policy interest rates.