BEIJING, Jan. 5 -- China will put in place a dynamic mechanism for first-home mortgage rates, allowing cities to adjust the lower limit for the rate based on the trend of their property prices, the country's financial authorities said Thursday.

Local governments can maintain, reduce or remove the floor of mortgage rates for first-time home buyers if their new-home prices have declined for three months in a row, both over a year ago and the previous three-month period, according to a circular jointly issued by the People's Bank of China and the China Banking and Insurance Regulatory Commission.

On the other hand, a city should restore the national lower limit for the rate if its new-home prices have increased for three months by the same measure, said the circular.

The move aims to better implement the country's city-specific housing policies, and ensure the sound and steady development of the housing market, the circular said.

Last May, China reduced the lower limit on first-home loan interest rates at the national level to 20 basis points below the corresponding tenor of the loan prime rate, and granted certain cities leeway to lower or scrap the limit in September.

New-home prices in four first-tier cities -- Beijing, Shanghai, Shenzhen and Guangzhou -- edged down 0.2 percent month on month in November. The 31 second-tier cities and 35 third-tier cities also saw new-home prices decline slightly, official data shows.

In 2023, China vowed to stick to the principle that "housing is for living in, not for speculation," and meet the people's basic housing needs and the need for improved housing conditions, according to the tone-setting annual Central Economic Work Conference last December.