The mortgage interest rate "change anchor" period is approaching——
Do you want to transfer to LPR? Listen to what the experts say
Our reporter Yao Jin
August 31 is the deadline for the "anchor change" of mortgage interest rates. Recently, announcements issued by many banks have made the topic of "choose fixed or floating interest rates" a hot search. How to choose the mortgage interest rate model? How will the subsequent interest rate go? There was a lot of discussion for a while.
According to the previous announcement of the People's Bank of China, the pricing benchmark for stock floating-rate loans is converted to the loan market quoted interest rate (LPR). From March 1 to August 31, 2020, the borrower can negotiate with the bank on an equal footing and decide whether the loan interest rate "changes anchor" to LPR (floating interest rate) or to a fixed interest rate.
Generally speaking, mortgage borrowers will be affected by the conversion, but there are a few exceptions: one is the provident fund part of personal housing loans and portfolio loans; the second is fixed-rate loans; the third is due before the end of 2020 Personal housing loans. If one of these three conditions is met, it will not be affected by this conversion.
Regarding the level of mortgage interest rates during the conversion period, the central bank stipulated that the interest rate levels at the time of conversion remain unchanged. In other words, the personal mortgage interest rate for the whole year of 2020 will remain the same as before. From January 1, 2021, if you choose a fixed interest rate, the mortgage interest rate will be consistent with the current interest rate level during the remaining period, and has nothing to do with the change in the LPR interest rate; if you choose a floating interest rate, the future mortgage interest rate will follow a 5-year period The LPR changes and changes, and the LPR is announced once a month, which may increase or decrease or remain unchanged.
Which way is better? According to industry insiders, the two conversion methods have their own advantages, and the specific choice depends mainly on the judgment of the future market interest rate trend of the mortgage borrower. If it is believed that LPR will fall in the future, then it will be better to switch to reference LPR pricing; if it is believed that LPR may rise in the future, then it will be advantageous to switch to a fixed interest rate.
Wen Bin, chief researcher of Minsheng Bank, suggested that borrowers of stock mortgages should comprehensively choose their own interest rate conversion method based on their own circumstances, as well as the loan price, loan period, and loan balance. If the previous mortgage interest rate discounts are strong and the remaining time of the monthly payment is relatively long, you can choose a fixed interest rate, which will not only help lock in the cost of the monthly payment, but also facilitate the family's income and expenditure arrangements. If the remaining time of the monthly payment is short and the loan balance is not large, a floating interest rate may be more appropriate.
"From a short- to medium-term perspective, my country's interest rates are on a downward trend. Converting existing floating-rate mortgages to LPR as the pricing benchmark is beneficial to borrowers and helps reduce borrowers' mortgage expenditures." said Dong Ximiao, chief researcher of China Merchants Union Finance Although the trend of long-term interest rates is difficult to judge, there is basically a consensus on the decline of short- and medium-term interest rates. In addition, even if there is a sharp rise in interest rates that is not the same as expected, home buyers can still avoid interest rate risks by repayment in advance.
It's getting closer and closer to August 31. A few days ago, a number of banks announced that starting from August 25, batch conversion of personal housing loans that meet the conditions and have not yet undergone the conversion of pricing benchmarks will be uniformly adjusted to LPR pricing. Many banks stated in their announcements that this move is to simplify customer operations and follow common practices in the banking industry.
However, this does not mean that consumers have no choice. All banks have made it clear that after the batch conversion is completed, if there are objections to the conversion result, it can be processed through online banking, mobile banking self-service transfer or negotiation with the loan handling bank before December 31, 2020 (inclusive). It should be noted that existing banks have made it clear that the cancellation operation can only be processed once.
“The reason why banks adopt batch conversion is mainly considering that the majority of mortgage borrowers are individuals, with a large and scattered number. The batch conversion method can save resources and improve processing efficiency.” said Zhou Maohua, an analyst at the Financial Market Department of Everbright Bank.
In addition, experts said that the conversion of stock floating-rate loan pricing benchmarks is beneficial to interest rate marketization and guiding interest rates downward. The "Report on China's Monetary Policy Implementation for the Second Quarter of 2020" recently released by the Central Bank pointed out that as of the end of June, the conversion of stock loan pricing benchmarks had reached 55%. Among them, the conversion progress of existing corporate loans is 76%.
Statistics show that since the reform in August 2019, the LPR quotation level has gradually declined. In August this year, the 1-year LPR and the 5-year or more LPR reported were 3.85% and 4.65% respectively, a cumulative decrease of 0.4 and 0.2 percentage points since the reform.