Chinanews client Beijing, March 7th (Reporter Li Jinlei) From March, the personal mortgage interest rate should be selected to be converted to LPR interest rate or fixed interest rate. Why convert? What loans need to be converted? How to choose more cost-effective? The central bank responded to some hot issues on March 6.

Data map: A bank staff counts currency. China News Agency reporter Zhang Yunshe

Why convert?

According to the requirements of the central bank, starting from March 1, 2020, financial institutions should negotiate with existing floating interest rate loan customers on the pricing benchmark conversion terms, and convert the original interest rate pricing method stipulated in the contract to LPR as the pricing benchmark. It can be negative), and the plus value is fixed for the rest of the contract; it can also be converted into a fixed interest rate.

The central bank said that currently most of the newly issued loans have used LPR as the pricing benchmark, but the pricing benchmark for existing floating-rate loans is still mainly the benchmark loan rate. Since October 2015, the benchmark interest rate on loans has remained unchanged. Compared with the benchmark interest rate for loans, LPR is more market-oriented and can reflect changes in market interest rates in a timely manner. It has fallen many times since August 2019.

In order to protect the rights and interests of both borrowers and lenders, and in particular allow borrowers to enjoy the benefits of falling interest rates , the central bank has clearly promoted the conversion of existing floating-rate loan pricing benchmarks starting on March 1, 2020.

What loans need to be converted?

The central bank said that loans that need to be converted to pricing benchmarks must meet several conditions at the same time: first, they have been issued before January 1, 2020, or contracts have been signed but not yet issued;

No conversion is required for fixed-rate loans, floating-rate loans with reference to the market quoted interest rate (LPR), etc. Existing floating rate loans that have been in the last repricing cycle may not be converted.

The provident fund personal housing loan does not need to be converted, but the commercial personal housing loan in the combination loan also needs to be converted into the pricing benchmark.

Which is better, LPR or fixed rate?

The central bank said that the two conversion methods have their own advantages, and the specific choice depends on their own judgments, especially on the future interest rate trend. If it is believed that LPR will decrease in the future, it will be better to convert to reference LPR pricing; if it is believed that LPR may increase in the future, then it will be advantageous to convert to fixed interest rates.

From the central bank public account.

For example, if your current personal mortgage interest rate is a 10% discount on the 5-year loan benchmark interest rate, then based on the current 5-year loan benchmark interest rate, your actual execution interest rate is 4.41% (= 4.9% × 0.9 ). According to the People's Bank of China [2019] Announcement No. 30, the interest rate level before and after the personal housing loan conversion remains unchanged.

First, if you choose to switch to a fixed interest rate, then the personal mortgage will carry an interest rate of 4.41% for the entire remaining period of the contract.

Second, if you choose to switch to the reference LPR pricing, the personal mortgage rate will be determined according to "LPR + (-0.39%) over 5 years". Among them, -0.39 is a fixed plus point spread, which is determined based on the difference between the current actual execution interest rate (4.41%) and the 5-year or more LPR (4.8%) announced in December 2019. After the conversion until the first repricing date, the mortgage interest rate is still 4.41%, but the calculation method has become "LPR4.8% + (-0.39%)"; from the first repricing date, the mortgage interest rate will become "The latest 5-year LPR + at that time (-0.39%)"; every subsequent repricing day and so on.

Comparing the above methods, it is clear that if you judge that the LPR + (-0.39%)> 4.41% for the next 5 years or more, that is, the LPR for more than 5 years> 4.41% + 0.39% = 4.8%, that is to say, the future LPR is higher than 4.8% , You can choose the first one; on the contrary, if you judge that the future LPR is lower than 4.8%, you can choose the second one.

Will banks deliberately raise LPR quotes?

The central bank said that the LPR quotation mechanism has as far as possible ensured that the quoting bank's true quotation made the published LPR fair. The 18 LPR quotation banks are all banks with strong influence, credibility and pricing power among the same type of banks, and they need to quote according to the bank's loan interest rates to the best customers, that is, the quotations of the quotation banks are true Trading as support.

At the same time, the central bank and the interest rate pricing self-discipline mechanism strictly monitor the quotation behavior of each quotation bank, regularly evaluate the quality of their quotations, and conduct the survival of the fittest for the quotation bank based on the assessment. (Finish)