(Economic Observer) Many places in China set off "early repayment of housing loans" reflecting the changing situation of the property market
China News Agency, Beijing, February 7th, title: Many places in China have set off a wave of "mortgage repayment in advance", reflecting the changing situation in the property market
China News Agency reporter Pang Wuji
Recently, people buying houses in many places in China have flocked to banks to deal with early repayment of mortgages.
Due to the concentration of applications, home buyers generally report that it is more difficult to repay loans in advance, and most people have to wait in line for 3-5 months to get a repayment quota.
A reporter from China News Agency called the Agricultural Bank of China and the Beijing branch of the Bank of China, and was told that they would have to wait in line for 2-3 months.
I still remember that in 2021, there were scenes of home buyers queuing up to borrow money from banks in many cities. In less than two years, "queuing up to borrow money" has become "queuing up to pay back money".
Why such a change?
The analysis found that the "early loan repayment wave" was mainly triggered by the following three factors.
It also reflects the changes in China's property market.
First, the yield of wealth management products has declined.
Before the Spring Festival, affected by fluctuations in the bond market, the yields of wealth management products dropped significantly, and some even showed negative returns.
In the past, financial products that were regarded as "no risk" suffered losses, and some people's multi-month income was "cleared overnight", which changed the direction of many people's investment and financial management.
The Zhuge Housing Data Research Center believes that the annual interest rate of many wealth management products has fallen below 3%, ordinary wealth management "cannot beat" the mortgage interest rate, and the lack of better investment channels has prompted residents to choose to use their deposits for early repayment.
At present, the annual interest rate of existing commercial loans for many homebuyers is 4% to 6%, especially the interest rate of some loans issued since 2020 is above 6%, while the current capital-guaranteed wealth management products mostly have a return rate of less than 3%.
Second, the recent dynamic adjustment of mortgage interest rates in many places.
After the official announcement of the first housing loan interest rate policy dynamic adjustment mechanism in early January this year, the lower limit of interest rates was intensively adjusted in many places.
According to incomplete statistics from the China Finger Research Institute, in January 2023, nearly 20 cities in China will adjust the lower limit of mortgage interest rates, including second-tier cities such as Zhengzhou, Tianjin, Fuzhou, Shenyang, and Xiamen.
As of January 31, among the 103 cities monitored by the Shell Research Institute, a total of 30 cities had the first-home loan interest rate lower than 4.1%, including 8 second-tier cities.
There are 4 cities where the first-home loan interest rate has dropped to 3.7%, which is currently the lowest level of commercial loan interest rate in the country.
The interest rate of new first-home buyers keeps falling, and for home buyers with high-interest mortgages in stock, they are more motivated to repay in advance.
Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, believes that at this time, many people either choose to repay part of the loan in advance, or sell the house after repayment, and then buy a house to move to a low-interest mortgage.
Third, the property market is expected to change.
Li Yujia believes that the background of the wave of early repayment is the change in property market expectations.
In the past, people generally believed that housing prices would rise, that the return on assets was far greater than the cost of mortgages, and that home buyers were not sensitive to mortgage interest rates.
Today, housing price expectations have reversed, housing prices have fallen in many places, and the cost of housing has also begun to surface.
Among them, mortgages, properties, depreciation, etc. have attracted more and more attention.
According to estimates, the comprehensive holding cost of a house in hot cities in China is about 5% to 9% of the total house price every year.
However, for banks, it is not happy to see residents getting together to repay their mortgages ahead of schedule.
According to industry insiders, in recent years, the interest rate of bank loans to the real economy has dropped significantly, and residential mortgage loans have become long-term stable and high-quality assets with relatively high yields.
At present, the number of applications for incremental housing loans has declined, while existing housing loans have been repaid in advance, and bank earnings will naturally be affected.
This is also an important reason why many home buyers recently reported long waiting times and banks tightening repayment conditions.
In response to the phenomenon of "difficulty in repaying in advance", many industry experts called for an appropriate reduction in the interest rate of stock mortgages to reduce the burden on home buyers and boost consumer confidence.
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