China has decided to cancel its decade-long favorable interest rate on private housing loans by commercial banks, the People Bank of China (PBOC), the country's central bank, said Wednesday.

According to the Beijing News, the bank said that from March 17 on, the interest rate for private housing loans would be lifted to "generally the same" as that of other loans and should not be lower than 90 percent of the basic interest rate of other loans.

According to the new rule, the interest rate for five-year-or-longer private housing loans will be raised to 5.51 percent, 0.2 percentage higher than the old rate of 5.31 percent.

"Although the 0.2-percent lift will not bring much influence to borrowers or the market, it's a signal to remind house buyers of the risk of interest rate increases," said Yi Xianrong, an expert with the Chinese Academy of Social Sciences.

PBOC also said the first installment can be generally lifted from the current 20 percent to 30 percent of the total house price and the localities can set their rules to that effect.

It also lowered the one-year interest rate of the excess part of the reserve by commercial banks from 1.62 percent to 0.99 percent.