Banks in China has just started to offer Fixed Rate Mortgages to both commercial and residential customers. One of the first movers is the China Everbright Bank (CEB).

While fixed rate mortgages are common and more broadly used in western countries like the United States, variable rate mortgages are more common in China, where the central bank has kept the rate relatively flat for the last couple of years and created a housing boom across the nation.

The first fixed rate products offered by China Everbright Bank are only available in select market like Suzhou, Nanjing etc. And choices are farely limited. For residential customer, they have two choices: five year fixed rate is offered at 5.94% and ten year fixed rate 6.18%. For commercial mortgages, the two rate are 6.18 and 6.42 respectively.

Borrowers in China are still hesitant in warming up to the idea of fixed rate mortgages as people are uncertain of the future direction of interest rates. While fixed rate mortgages offers long term protection against rate increases, the customers do have to pay a premium to get the protection in the form of higher rate than the current going rate offered by variable rate mortgages.