The 25-basis-point cut to over-five-year loan prime rate to 3.95 percent on Tuesday is good news for mortgages, and will help commercial banks to lower interest rates on first-home loans and guide more capital to private and small enterprises, industry experts said on Wednesday.

This, they said, will bode well for both the capital market and the struggling housing market.

The LPR cut, the biggest ever by the central bank, not only indicated the financial authority's resolve to stabilize the property market, but also sparked talk that it will boost housing demand, said analysts.

In China, many lenders base their mortgage rates on over-five-year LPR. On Tuesday, the People's Bank of China left the one-year LPR unchanged at 3.45 percent.

Introduced in 2019, the over-five-year LPR has been China's benchmark rate ever since. Tuesday's cut has made the home mortgage rates approach historical lows, said Chen Wenjing, director of research with the China Index Academy.

Following the cut, housing loan rates for first-time homebuyers can fall to as low as 3.75 percent, and rates on second-home mortgages could decline to 4.15 percent, he said.

"With the exception of a few regions that are still having their first-home mortgage rates above 4 percent, the majority of local home markets will be capable of enjoying a lending rate of below 4 percent," said Chen.

Rational homebuyers will be among the first to benefit from the LPR cut, said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

"Taking the 30-year 1 million yuan fully amortized mortgage for example, the monthly payment would be reduced about 150 yuan ($20.85), a comparatively big relief in comparison to previous adjustments," Yan said.

Tuesday's rate cut, he said, will further encourage buying sentiment in the property market in the coming months.

Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center, said further LPR cuts may be unlikely in the near term, though mortgage rates will continue their downtrend.

First-home buyers saw their mortgage rate stay at 3.84 percent on average in major Chinese cities in January, while that for second-home buyers was 4.41 percent, Li said.

The steep cut will effectively decrease the cost for buying residential properties, and ease the repayment pressure on existing home loans, said Ma Hong, a senior researcher with GDDCE (Guangzhou Development District Chief Economists) Industrial Research Institute.

Considering the lower-than-expected recovery in housing sales, more supportive policies are needed to boost market confidence, Ma said.

Several supportive measures have been introduced this year. To encourage demand, the nation's four biggest cities — Guangzhou and Shenzhen in Guangdong province, and Shanghai and Beijing — had eased their housing policies ahead of the Chinese New Year.

The top-tier cities' moves suggest more cities may follow suit to fine-tune their home market policies in accordance with their own conditions in a timely manner, said Chen.

Meanwhile, along with the founding of the urban property financing coordinated mechanism, property developers' financing has gained more support.

More than 8,000 real estate projects were eligible for property financing, according to China's five biggest commercial banks. On the one hand, the financial support will promote the timely delivery of these property projects; on the other, it will help stabilize real estate enterprises' expectations and boost market confidence, said analysts.

Major Chinese cities might welcome a mild post-Spring Festival sales pickup, considering the positive effects of the property measures introduced in first-tier and key second-tier cities and Tuesday's big cut, Chen said.

Owing to the high base of last year, however, home sales data in the following months may not be strong in year-on-year terms, she said.