Sino-Singapore Jingwei Client February 29 (Wei Wei intern Shao Meng Du Lunhui) For tens of millions of "mortgage families", an important moment has come. From March 1st to August 31st, "mortgage families" faced the major issue of re-signing loan contracts.

Why do I need to re-sign a loan contract? Because the interest rate pricing benchmark is changing.

The central bank issued an announcement at the end of last year, and as of March 1, 2020, financial institutions should negotiate with customers with existing floating-rate loans. Interest rate pricing is one of two options: fixed interest rates or "LPR + plus points (plus points can be negative)".

Except for personal home loans that have been priced with reference to LPR since October 8 last year, other lenders will need to re-sign contracts. So how should customers change and choose which pricing method?

Mortgage interest rate data source: Photo by Zhongxin Jingwei

Some banks open multi-channels such as mobile phones and online banking

The epidemic struck, but the conversion of the pricing benchmark for existing loans has not stopped. The central bank deputy governor Liu Guoqiang said at a press conference on February 27 that the conversion of existing loans to LPR, which began on March 1, will continue to progress as planned and is expected to be completed on schedule.

On February 29, China Construction Bank, ICBC, Bank of China, Agricultural Bank of China, Bank of Communications, and Postal Savings Bank all announced that starting from March 1st, the work of converting the floating floating-rate personal loan pricing benchmark to LPR will be initiated, and it can be done through the mobile banking line. Apply. It is worth noting that offline channels have not been opened during the epidemic period, and the opening time is yet to be determined.

Unlike the six state-owned banks, as of the time of publication, among the 12 national joint-stock banks, the announcements of various banks and the feedback from personal loan managers interviewed by Zhongxin Jingwei reporters were reported. Only CITIC Bank explicitly started the online conversion work on March 1. Hengfeng Although banks, Bohai Bank and Zheshang Bank stated that they were launched on March 1 but did not clarify the procedures, most other banks have delayed the start-up time, and will subsequently notify customers via SMS, phone and other methods.

Bank of China data map source: Photo by China and Singapore

Sino-Singapore Jingwei reporter sorted out the handling methods of some banks as follows. The specific handling situation needs to be confirmed with the loan bank.

China Construction Bank: From March 1, 2020, support customers to conduct business through two online channels, including China Mobile's mobile banking and online banking. Later, according to the progress of epidemic prevention and control, offline channels will be gradually opened to support customers to conduct business with smart teller machines (STMs), counters, and personal loan centers at any CCB business outlets nationwide. The specific opening time will be notified separately.

Industrial and Commercial Bank of China: ICBC provides multiple channels. Customers can choose "deposit-loan-interest rate benchmark conversion" on mobile banking, smart teller machines (expected to be launched in mid-March), SMS banking (expected to be launched in mid-April), or consulting loan service banks. Handle.

Bank of China: Beginning at 7:00 on March 1st, you can apply for the conversion of the existing floating-rate personal loans (except poverty alleviation loans, entrepreneurial guarantee loans, and national student loans) through the Bank of China Mobile Banking and Internet Banking. In order to reduce the crowd gathering, the offline acceptance channels will be opened according to the epidemic prevention and control situation.

Agricultural Bank: The conversion of existing personal loan pricing benchmarks is mainly handled through self-service operations such as the Agricultural Bank of China's handheld bank, online banking, and outlets' super counters; if it is not possible to do so through the above channels, it can be handled through the counter after opening the counter. Apply at the counter over the counter or contact the original loan agency.

Bank of Communications: For personal loans that meet the requirements of the Central Bank's announcement, where the remaining period is more than 1 year, customers can log in to the mobile banking loan column for self-service conversion; for other loans or credit lines that have taken effect, it is recommended to consult the loan handling outlets after the epidemic situation ends .

Postal Savings Bank: Customers can log in to online banking, mobile banking or contact the original loan business agency.

CITIC Bank: Borrowers of commercial personal housing loans can switch from mobile banking (loan zone-LPR conversion news), online banking (personal internet banking-loan zone-loan pricing base interest rate conversion) from March 1 to July 21 LPR) for LPR conversion.

Industrial Bank: Individual loan customers can sign and confirm supplementary agreement on loan pricing benchmark interest rate conversion at business outlets, mobile banking, and online banking. Channels such as mobile banking and online banking will carry out pricing benchmark conversion from April 15th, and business outlets will be launched in due course.

China Merchants Bank: In early April, the pricing benchmark for commercial personal housing loans within the scope of the conversion will be uniformly converted to LPR. For other personal loans from April 1, 2020 to August 31, 2020, customers can apply for confirmation through the China Merchants Bank App or China Merchants App Online.

Hua Xia Bank: It will gradually open pricing benchmark conversion channels such as mobile banking to handle business at the end of March. The business outlets will be launched in a timely manner in accordance with the control situation of the new crown pneumonia epidemic.

Guangfa Bank: The conversion will start on April 1st and will be handled for customers by signing supplementary agreements with online banking and mobile banking.

China Everbright Bank: On July 21, 2020, a batch conversion of personal stock floating-rate housing loan pricing benchmarks will be performed.

SPDB: The start of the conversion will be delayed compared to the time required by the People's Bank of China. The specific conversion start time and conversion plan will be notified later.

Minsheng Bank: In addition to handling counters at business outlets, it can also provide adjustments such as remote face-to-face signing and mobile banking online signing. The opening time of mobile banking online signing services will be announced separately.

Ping An Bank: It is planned to gradually open the pricing benchmark conversion channel starting from March 2020.

What is the difference between the two interest rate pricing methods?

According to the central bank announcement, there are two options for re-pricing the pricing mechanism for interest rates, one is a fixed interest rate, and the other is an "LPR + plus point (plus point can be negative)" interest rate. It should be noted that the lender has only one chance to choose. Once it is selected, it cannot be changed during the contract period. So which one should you choose to save the most money?

Option 1: Fixed interest rate

The fixed rate is easier to understand, that is, to keep the current interest rate unchanged.

Chen Jianing, a senior researcher at Suning Financial Research Institute, for example, supposes that the customer's current mortgage interest rate is 3.43%, and the customer's subsequent fixed interest rate is still 3.43%. This interest rate will run through the customer's entire loan cycle. No matter how the market interest rate fluctuates in the future, the customer will repay at the rate of 3.43%.

Option two: "LPR + plus points"

To put it simply, based on the 5-year LPR interest rate of 4.8% on December 20, the "plus point" was calculated compared with the original execution interest rate level. The "plus point" remains unchanged until the contract expires.

At present, the benchmark interest rate for loans of more than 5 years in China is 4.9%. Previously, the interest rate on housing loans had risen or fallen based on the benchmark interest rate.

Assume that the loan contract signed by the lender is a 20% decrease in the benchmark interest rate, then the current execution rate is 4.9% × (1-0.2) = 3.92%, and the LPR for a 5-year period or more issued in December 2019 is 4.8%. The point of addition is -88 basis points (3.92% -4.8% =-0.88%).

If the loan contract signed by the lender is a 20% increase in the benchmark interest rate, then the current execution rate is 4.9% × (1 + 0.2) = 5.88%, and the increase after conversion is 108 basis points (5.88% -4.8% = 1.08%). ).

In order to facilitate understanding, the reporters of Sino-Singapore Jingwei measure the floating rate of different benchmark interest rates, and calculate the interest rate plus point coefficients, as follows (the specific data is based on the loan bank's calculation):

Benchmark interest rate and LPR conversion comparison table Source: Zhongxin Jingwei Weiwei tabulation

It should be noted that although the LPR is updated once a month on the 20th, the mortgage interest rate does not change with each month, but is adjusted on the annual repricing day. The interest rate level is determined by recalculation of the corresponding term LPR and the point value in the latest month.

According to a personal loan manager of a joint-stock bank, if the customer's repricing date is January 1 each year, this means that after the conversion, the loan interest rate in 2020 will still maintain the previous interest rate level, that is, the monthly supply in 2020 will remain unchanged, and Customers need to pay attention to the LPR quotation level on December 20 each year to determine the monthly supply for the next year.

Which interest rate pricing method is more cost-effective?

For lenders, the key to choosing a pricing method is to judge the future trend of LPR.

According to the analysis of Rong360 Big Data Research Institute, in the medium and long term, the probability of LPR will continue to decline, and the user chooses to switch to the LPR pricing benchmark. The plan is more favorable, and future interest expenses will be reduced. Of course, compared with the decrease in LPR, interest expenses may be reduced. If users pay more attention to interest rate stability and convenience, they can also choose to switch to fixed interest rates.

"In the future, there is a high probability that the interest rate reduction cycle will enter, and LPR will gradually decline. It will be more cost-effective to convert housing loans into LPR pricing methods." The above-mentioned individual loan manager believes that conversion to fixed interest rates cannot enjoy the dividends of the downward interest rate cycle.

However, Chen Jianing reminded that as a product of interest rate liberalization, there is some uncertainty in the long-term trend of LPR. Once the economy enters the cycle of interest rate hikes, it is not ruled out that LPR may go higher, which will increase the burden of mortgage repayments on mortgage borrowers.

He suggested that for borrowers with short remaining repayment terms or borrowers who are not sensitive to interest rate changes, they can choose to refer to LPR pricing to enjoy the reduction in monthly supply caused by the short-term LPR decline, even if LPR occurs in the long-term dimension. On the upside, the increased monthly supply has little effect on the borrower's life. (Zhongxin Jingwei APP)

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