It is increasingly necessary for China to reduce interest rates on existing mortgages as soon as possible to revive consumer confidence, stabilize housing market expectations and meet the annual economic growth target, analysts said.

"The public is eagerly looking forward to existing home loan rate reductions, necessitating prompt policy responses," said Yang Haiping, a researcher at the Central University of Finance and Economics' Institute of Securities and Futures.

Lowering the rates can ease the financial burden on homebuyers and stimulate consumer spending, tapping into the policy space provided by the US Federal Reserve's interest rate cut, Yang said, adding that a reduction of existing home loan rates may take place in October.

Following the Fed's rate cut of 50 basis points on Wednesday, the loan prime rate, China's market-based benchmark of lending rates, remained unchanged on Friday, leading to market speculation that policy space may exist for lowering current mortgage rates.

With the widening gap between rates for new and existing mortgages having triggered early repayments of home loans, calls for lowering existing mortgage rates have gained traction since August.

Soochow Securities estimates that the gap between rates for new and existing mortgages is approximately 82 basis points. The balance of personal housing loans was 37.79 trillion yuan ($5.36 trillion) by the end of June, a decrease of 400 billion yuan from a quarter earlier, said the People's Bank of China, the country's central bank.

The early repayments are seen by economists as restricting consumers' spending power, taking away quality assets from commercial banks and destabilizing housing market expectations.

"We estimate that the existing mortgage rates may be cut by about 60 basis points on average, meaning that the average interest rate for existing home loans will decline from about 4.27 percent to around 3.67 percent," said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

Wang said that the PBOC may implement the cut using the same method as late last year, when lenders were encouraged to replace existing first-home mortgages with new ones at lower rates.

Allowing homebuyers to refinance with a different bank is unlikely, which could give rise to unorderly competition among lenders, Wang said, adding that banks may gradually reduce deposit rates to offset the impact of lower mortgage rates on their bottom lines.

Yang said the PBOC may also need to take measures such as reducing the reserve requirement ratio and providing targeted low-cost funding to commercial banks to help them maintain a reasonable profitability level.

The PBOC said earlier this month that it will introduce additional policy measures to reduce financing costs for enterprises and households.