BEIJING, May 17 -- China will cut the loan rates of individual housing provident fund by 0.25 percentage points, the central bank announced Friday.

Starting May 18, the interest rate of first-home loans that mature within or at five years will be set at 2.35 percent, while the over-five-year rate will be slashed to 2.85 percent, the People's Bank of China said on its website.

For second-home purchases, the interest rate of loans that mature within or at five years will be no lower than 2.775 percent, while the over-five-year rate will be no lower than 3.325 percent.

The housing provident fund is a long-term housing savings plan made up of compulsory monthly deposits by both employers and employees. It can only be used by employees for house-related expenses.