How does the central bank's 500 billion yuan benefit affect "guaranteed housing" and mortgages?

　　China News Service, November 25th (China News Finance reporter Zuo Yukun) On November 25th, the central bank announced a comprehensive reduction in the reserve requirement ratio, and real estate will benefit again.

　　This is not a sudden news. The executive meeting of the State Council held on November 22 further detailed and emphasized the support for real estate, and at the same time mentioned the "reduction of reserve ratio" information.

　　Since November, a number of regulatory authorities have successively released favorable policies to provide more financial support for real estate companies and home buyers. Relevant policies and funds have been gradually implemented.

Data map: Real estate real estate.

Photo by China News Agency reporter Zhang Bin

Credit extension will be further strengthened before the end of the year

　　According to the website of the central bank, the People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on December 5, 2022 (excluding financial institutions that have implemented a 5% deposit reserve ratio).

The RRR cut released a total of about 500 billion yuan of long-term funds.

　　"This RRR cut can further release liquidity to the market, optimize the capital structure of financial institutions, further enhance financial service capabilities, better support the recovery of the real estate industry, and promote the stable operation of the economy." 58 Branch of Anju Guest House Industry Research Institute Chang Zhangbo pointed out that in the face of the external environment with increasing uncertainties and the continued downward pressure on the real estate market, the necessity of this RRR cut is very obvious.

　　Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, said that the executive meeting of the State Council held on November 22 proposed "timely and appropriate use of monetary policy tools such as RRR cuts to maintain reasonable and sufficient liquidity"; "The official announcement proposes to fully stabilize and restore the entire chain of real estate financing, as well as a package of lending instructions. The loan issuance in the last two months of the fourth quarter will increase significantly, and the demand for funds will increase.

　　"The real estate market will be the key beneficiary area. This RRR cut has the intention of increasing credit supply before the end of the year. The RRR cut and credit supply will inject liquidity into the market, which will help boost market confidence and ease the impact of recent liquidity fluctuations on the economy. The disruption of operation will promote the stability of the macro economy at the end of the year." Liu Lijie, a market analyst at the Shell Research Institute, said.

Data map: A real estate project under construction.

Photo by China News Agency reporter Zhang Bin

Accelerate the "guaranteed delivery of buildings" and boost personal loans

　　"Currently, the regulatory authorities are strengthening financial support for real estate companies, individual home buyers, and 'guaranteed housing'. The release of more capital liquidity from this RRR cut will also be conducive to the landing of real estate-related funds." Index Business Department of China Index Research Institute Chen Wenjing, director of market research, pointed out.

　　On November 21, the central bank launched a 200 billion yuan "guarantee building" loan support plan for six commercial banks.

"The overall speed-up of 'guaranteed housing' will inevitably require supporting capital investment, mainly commercial bank credit." Li Yujia pointed out that the overall improvement of real estate financing also requires the demand side of the real estate market to maintain a certain degree of activity to improve the hematopoietic function of developers. Financing is of great help in boosting the confidence of developers.

　　"Recently, based on risk concerns, banks are less willing to lend. To this end, the central bank first provided 200 billion interest-free loans, and then released cost-free funds through RRR cuts. The combination of the two will boost the enthusiasm of enterprises to increase lending." Li Yujia said.

　　For the demand side, Liu Lijie believes that this RRR cut will provide "ammunition" for increasing credit support in the housing market, which will help improve market expectations and accelerate market bottoming.

　　"After this RRR cut, the possibility of a correction of the LPR with a period of more than 5 years as the 'anchor' of mortgage interest rates increases, that is, the

reduction ; second, the total amount of credit will increase, Local governments have further policy space, such as reducing the down payment for home purchases and relaxing the criteria for identifying first-time homes, etc., which will help release demand for rigid and improved housing.” Liu Lijie said.

　　"Recently, there have been a lot of positive signals about real estate funds, and the purpose is to boost the current loan sentiment." Li Yujia predicts that the sentiment of bank loans in the remaining two months of this year will improve significantly, thereby stabilizing the fundamentals of the real estate market at both ends of supply and demand, and promoting the real estate market. Build a bottom and stop falling.

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