The benchmark interest rate of 0.7 means that the loan interest rate is not lower than 0.7 times the loan benchmark interest rate announced by the central bank.

If the loan base interest rate is 4.9%, then the minimum loan interest rate cannot be lower than 4.9% times 0.7, which is 3.43%. This is a lower limit set by the central bank in order to prevent financial institutions from excessively lowering loan interest rates and causing excessive capital inflows into the real estate market and other fields.

However, starting from October 8, 2019, the central bank canceled the 0.7 times lower limit of loan interest rates and replaced it with the loan market quotation rate.