China implemented the biggest cut on record to a mortgage rate benchmark on Tuesday, indicating monetary policymakers' dedication to bolstering economic revival, with additional cuts to a key policy rate likely on the horizon, experts said.

The over-five-year loan prime rate, on which lenders base their mortgage rates and long-term corporate loans, dropped by 25 basis points to 3.95 percent, the first cut since June 2023, said the People's Bank of China, the country's central bank.

The 25-basis-point cut marks the biggest cut since the over-five-year LPR served as an interest rate benchmark in 2019. The one-year LPR was left unchanged at 3.45 percent on Tuesday.

Yan Yuejin, director of the E-house China Research and Development Institution, said Tuesday's cut can save about 150 yuan ($20.84) in monthly payments for a new homebuyer who takes out a 30-year mortgage with a principal of 1 million yuan, thus helping facilitate the housing market recovery.

With Tuesday's cut underscoring policymakers' ramped-up efforts to address the housing market weakness and stabilize the broader economy, experts said the PBOC may add more stimuli and reduce interest rates further in the second quarter.

Ming Ming, chief economist at CITIC Securities, said it remains possible for the PBOC to cut the medium-term lending facility rate or MLF rate — a key policy benchmark — in the second quarter, given that it is highly likely that global monetary policy will loosen this year.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said the MLF rate is likely to reduce in the near future as Tuesday's cut may not fully solve the issue of low price growths and rising real borrowing costs of corporations and households.

However, Charlie Zheng, chief economist at Samoyed Cloud Technology Group Holdings, said the PBOC may remain cautious about cutting the MLF rate due to concerns over more weakness in the yuan.

"Without a rate cut from the US Federal Reserve, the PBOC may choose not to reduce the MLF rate."