(Economic Watch) Mortgage loan interest rate cut by 15 basis points China's property market is expected to stabilize rapidly

　　China News Service, Beijing, May 20 (Reporter Pang Wuji) The People's Bank of China authorized the National Interbank Funding Center to announce the latest LPR (loan market quoted interest rate) on the 20th. The one-year LPR was 3.7%, the same as the previous month; The LPR with a maturity of more than 5 years was 4.45%, down 15 basis points from the previous month.

　　China's personal housing loan interest rate is formed by adding points to the LPR with a term of more than 5 years. At present, more than 99% of the personal housing loan interest rate is linked to the LPR with a term of more than 5 years.

The reduction of the LPR with a maturity of more than 5 years means that the mortgage interest rate will be reduced by 15 basis points.

　　There are four aspects of this mortgage interest rate cut worth paying attention to:

　　First, the "separate" interest rate cut for housing loans this time, and the 5-year LPR hit the largest drop in history.

　　Wen Bin, chief researcher of China Minsheng Bank, pointed out that since the reform of the LPR quotation formation mechanism, for the first time, the 1-year LPR did not drop, and the 5-year LPR declined.

　　In addition, in the past few interest rate cuts, most of the LPRs over 5 years were cut by 5 basis points at a time. Even in April 2020, when the epidemic broke out, the rate cut was only 10 basis points.

This one-off cut of 15 basis points is the largest drop in history, and the official policy intention to stabilize the property market is obvious.

Zhang Dawei, chief analyst of Centaline Real Estate, believes that this is the biggest positive for the property market in recent years.

　　Second, this rate cut has a superimposed effect with the recent official adjustment to the lower limit of the interest rate for first home buyers.

　　Recently, the central bank and the China Banking and Insurance Regulatory Commission issued the "Notice on Issues Concerning Adjustment of Differential Housing Credit Policies", which adjusted the lower limit of the interest rate of newly issued first-home commercial personal housing loans from LPR to LPR minus 20 basis points, and the second set of housing loans. The interest rate floor remains LPR plus 60 basis points.

After this rate cut, according to the latest LPR calculation, the minimum interest rate for personal housing loans can reach 4.25% for the first home and 5.05% for the second home.

　　A few days ago, a report released by the Think Tank Center of the E-House Research Institute pointed out that according to public information and feedback from some bank outlets, there are currently 20 first homes in 20 cities including Guangzhou, Shenzhen, Tianjin, Jinan, Qingdao, Zhengzhou, Suzhou, and Kunming. The minimum rate fell to 4.4%.

After this rate cut is implemented, the lowest interest rate for the first home in these cities is expected to follow up quickly, dropping to 4.25%.

　　Third, after this rate cut, all types of home buyers can get interest discounts.

　　Experts pointed out that for newly issued commercial personal housing loans, the interest rate will be immediately reduced by 15 basis points, superimposed on the previous official adjustment of the lower limit of the interest rate for the first home. also benefit from it.

　　At the same time, the existing commercial personal housing loans will also be reduced by 15 basis points after the re-pricing date of the interest rate agreed in the contract between the buyer and the commercial bank.

Based on the loan amount of 500,000 yuan (RMB, the same below), the period of 30 years, and the equal principal and interest repayment, the average monthly payment can be reduced by about 45 yuan, and the interest expense will be reduced by about 16,000 yuan in the next 30 years.

　　Wen Bin believes that the interest rate of newly issued housing loans in some cities will be significantly lowered, which will help to reasonably meet the housing needs of residents.

For existing housing loans, the decline in LPR will reduce the cost of existing housing loans through loan re-pricing, which will play a bailout role and reduce the debt burden of residents, thereby saving more funds for consumption.

　　Fourth, the property market is expected to bottom out.

　　Recently, policies to stabilize the property market have been issued frequently in various places. Industry insiders believe that in the second half of the year, China's property market is expected to bottom out and rebound.

　　Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Planning Institute, pointed out that cutting interest rates to reduce monthly payments is an important tool to boost sentiment for home buyers.

Judging from the real estate data in April, the sales side of real estate fell sharply, and the pressure on developers' funds was difficult to relieve, which affected all links and brought down the entire real estate chain.

The recovery of the demand side is the key to solving the problem.

The interest rate cut for housing loans is to stabilize the demand side of the property market quickly and create conditions for solving supply-side shocks.

　　Li Yujia believes that as the epidemic eases, the economic and social cycle may be on the right track in June, and the package of policies will begin to take effect, and the superimposed effect will be fully manifested in the second half of the year.

At present, the bottom of house prices and sales has begun to appear, and it may fully recover in the second half of the year.

　　Wang Xiaoqiang, chief analyst of Zhuge Housing Data Research Center, pointed out that an important reason for the lack of market momentum on the demand side of the current real estate market is the lack of market confidence. The central bank has repeatedly supported substantive support, which has played a good role in boosting the market confidence of home buyers. .

With the support of credit easing, the speed of market stabilization will accelerate.

　　According to the monitoring of the Middle Finger Research Institute, since the beginning of this year, more than 100 cities across the country have optimized and adjusted their real estate policies more than 200 times, and the pace and intensity of policies have continued to increase.

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