Pay off 800,000 mortgages in advance and save 1.11 million in interest. Are these young people keen to pay off mortgages early?
■ The Red Star Capital Bureau noticed that recently, many people have shared their experiences of repaying their mortgages ahead of schedule on social platforms such as Xiaohongshu, Weibo, and Douyin.
High interest rates, high repayment pressure, and lack of investment targets when buying a house are the key words for young people to choose to repay their loans in advance.
■ The financial data for April released by the central bank also supports this trend to a certain extent.
In April, housing loans decreased by 60.5 billion yuan, a decrease of 402.2 billion yuan year-on-year.
The previous February financial data also showed that medium and long-term loans, which accounted for a large proportion of personal housing mortgage loans, decreased by 45.9 billion yuan.
■ For individuals, is it worthwhile to repay the mortgage early?
On May 24, Political Commissar Lu, chief economist of Industrial Bank, said in an interview with reporters that if there is an idle fund, whether to repay the mortgage early depends on whether you can use the funds to earn more money than the mortgage interest. , if not, it is also possible to repay the loan early.
[Set off a "tidal wave" of loan repayment]
800,000 were paid in advance, saving 1.11 million
Isn't that better than making money with money?
At the beginning of May, after comparing buying a house, buying a car or buying a fund, Wang Li finally decided to pay off the mortgage in advance.
In 2019, Wang Li borrowed 1.86 million yuan from CITIC Bank at a loan interest rate of 6.2% to buy a second house in Beijing with a term of 25 years and a monthly payment of more than 11,700 yuan.
After 36 months of repayment, Wang Li found that most of the monthly payments during this period were interest payments, and the principal was only repaid 100,000 yuan.
Looking at the monthly mortgage interest of 8,407 yuan, and then looking at the "green" fund on the screen, Wang Li thought that the money earned from financial management was "a drop in the bucket" compared to the mortgage interest. She immediately opened the bank APP and clicked "Repay Loan Early" reserve".
After repaying the loan early, Wang Li's mortgage interest was reduced by 1.11 million yuan.
"I paid 800,000 yuan in advance, and the interest was reduced by 1.11 million yuan. Isn't this more profitable than financial management?" Wang Li shared the joy on her social account.
There is also Chen Fang from Hangzhou who has the same idea.
This year is her second year of buying a house. The monthly payment of 10,000 yuan puts her under pressure. "Life is tight."
On May 5, Chen Fang went to the Agricultural Bank of China to repay part of the loan with the 600,000 yuan borrowed from her parents and the 200,000 yuan she saved.
The moment she got the early repayment certificate, Chen Fang felt that her back was straightened.
The reporter noticed that on social platforms such as Xiaohongshu, Weibo, and Douyin, many people are sharing their experiences of repaying their mortgages ahead of schedule.
"Should I repay the mortgage early" has also become a hot topic.
On May 13, the central bank announced the financial data for April, of which housing loans decreased by 60.5 billion yuan, a decrease of 402.2 billion yuan year-on-year.
Financial data in February also showed that medium and long-term loans, which accounted for a large proportion of personal housing mortgage loans, decreased by 45.9 billion yuan.
Founder Securities Research Report pointed out that this is the only two negative growth since the statistics in 2007, indicating that the repayment of residential mortgage loans is higher than the amount of new mortgage loans.
【Why pay in advance?
High interest rates + high pressure + lack of investment targets
Early repayment of housing loan becomes a new way of financial management
Compared with the past, "the longer the mortgage term is, the better" and "the mortgage can be borrowed as much as possible", the young people in this group generally believe that "repayment means earning", and repaying the mortgage early seems to be a new "financial management method".
Before choosing to repay the loan early, Wang Li went to the bank to inquire about the current deposit interest rate. After looking around, she found that only a small joint-stock bank has the highest deposit interest rate, which is "4% for 5 years".
There are very few wealth management products on the market whose annualized rate can exceed the mortgage interest rate.
Founder Securities also mentioned in the research report that at the end of April, many banks lowered deposit rates, and the yields of commodity-based and wealth management products as deposit substitutes also gradually declined.
When the reporter asked if he had considered inflation in the next few years, Wang Li said that compared with inflation in the next few decades, he was more concerned about how to maximize the current money.
The current situation is that it is difficult to find good investment targets.
In addition to finding better investment targets, the high mortgage interest rate when buying a house is the main reason for this group of young people to repay their mortgages ahead of schedule.
This year, the domestic mortgage interest rates have shown a downward trend.
According to media reports, this week, many cities have successively launched the lowest interest rate of 4.4% for the first home, including some popular cities, such as Qingdao, Chongqing, Tianjin, Suzhou, Guangzhou, Shenzhen and so on.
In addition, "stressed" is also one of the key words for this group of young people to repay their loans ahead of schedule.
Yang Yue, who lives in a new first-tier city, also recently considered repaying her mortgage early. She told the Red Star Capital Bureau that her child will be born this year, and the high monthly mortgage has become a living burden.
After discussing with her family, Yang Yue plans to use some spare money in her hand to repay the loan in advance, and choose the method of keeping the term unchanged and shortening the monthly payment to reduce the daily pressure.
Is it worthwhile to pay off your mortgage early?
Idle funds cannot earn more than mortgage interest and can be repaid in advance
In recent months, Liu Qi, an employee of a Shenzhen sub-branch of Shanghai Pudong Development Bank, has clearly felt that more and more customers have repaid their mortgages ahead of schedule.
Liu Qi told reporters that some banks will stipulate that there will be penalty interest for early repayment of mortgages within a year or a few years.
But the amount of penalty interest is not high, usually a few months of interest.
So, is it worthwhile for individuals to pay off their mortgage early?
On May 24, the reporter interviewed Political Commissar Lu, Chief Economist of Industrial Bank. He said that if there is an idle fund, whether to repay the mortgage early depends on whether you can use the funds to earn more money than the mortgage interest. , if not, it is also possible to repay the loan early.
Don't just consider the difference between the yield and the mortgage interest rate
The Founder Securities Research Report believes that it is not a cost-effective transaction to repay early only considering the widening spread between wealth management yields and mortgage interest rates.
It is also necessary to jointly evaluate multiple factors such as the repayment time period, repayment method, and number of repayment periods.
For example, Founder Securities said: Suppose some residents bought a house in October 2018 and needed to repay a commercial loan of 1 million yuan, with a loan period of 30 years and a mortgage interest rate of 5.7%.
Residents are faced with two choices. Option 1: Use cash to pay off the mortgage in one go; Option 2: Purchase wealth management products.
So which option will bring the greatest personal benefit?
Option 1: Pay off the mortgage early.
Through the mortgage calculator, the last one-off repayment (26 years remaining) was 949,400 yuan, saving 861,400 yuan in interest.
The average annual interest savings is 33,100 yuan.
Option 2: Purchase wealth management products.
With 949,400 yuan for financial management (3%-4%), the annual income can reach 28,500-38,000 yuan.
Founder Securities pointed out that when the wealth management yield is 3.5%, this is basically the same as the income saved by early repayment of the mortgage interest rate of 5.7%.
Chengdu Business Daily-Red Star News reporter Yu Yaoqiang YaxianKeywords: