Author: Android
Since the second half of last year, the wave of early repayment has intensified, especially after the Spring Festival this year, as people's year-end bonuses are issued, they have more money on hand, and the successive cuts in new mortgage interest rates have brought about an increasingly strong sense of imbalance , It further strengthened the determination of some "high-ranking guards" to repay their loans in advance.
So, under what circumstances is it most cost-effective to repay the loan early, and under what circumstances is it not suitable to repay the loan early?
Recently, a reporter from China Business News interviewed a number of experts and people in the industry, and gathered their opinions to give practical advice to home buyers.
Mortgage interest rate "parabolic"
Will you pay off the loan early?
Recently, China Business News conducted a small-scale survey and randomly interviewed a number of home buyers. According to the survey results: the higher the mortgage interest rate, the stronger the willingness to repay the loan in advance.
In fact, mortgage interest rates have experienced a "parabolic" trend in recent years.
Just take the first-home loan interest rate as an example. Since 2017, the national first-home loan interest rate has risen unilaterally. According to data released by Rong 360, by November 2018, the national first-home loan interest rate has reached an average of 5.71%. Set more than 6%.
This is also the time when mortgage rates are at their peak.
In those years, various regions introduced a number of regulatory measures targeting the real estate market. It was not until December 2018 that the first-home loan interest rate began to turn downward. Since then, although there have been twists and turns in the trend of mortgage interest rates, it has generally fallen steadily, falling from 5.71% .
In December 2019, the national first-home loan interest rate averaged 5.52%, in December 2020 it was 5.23%, and in December 2021 it was 5.4%.
In other words, between 2017 and 2021, the average national first-home loan interest rate basically hovers in the "5 era".
Entering 2022, mortgage interest rates will drop rapidly.
On the one hand, since the fourth quarter of 2021, the LPR with a period of more than five years has been lowered three times. On the other hand, it is also due to the superposition of multiple policies to boost real estate.
Taking Guangzhou as an example, at the beginning of 2022, the first-home loan interest rate generally dropped from around 5.85% to 5.65%, and experienced multiple cuts in the first half of the year.
By May, the first-home loan interest rates of most banks were around 5.2% to 4.8%, and some foreign-funded banks had dropped the lowest to 4.6%.
This year, the first-home loan interest rate in more than 30 cities has "broken from 4 to 3", and the "3 era" has begun to come.
For those who bought houses in the "5th era", the arrival of the "3rd era" has brought them a greater sense of psychological imbalance and the cost of interest.
Although the reduction of LPR can save part of the interest, the "high point plus point" is fixed. The interest rate difference between the stock mortgage and the new mortgage is too large, and early repayment of the loan has become a realistic choice for them to reduce interest expenses.
A home buyer who bought a house in October 2019 with a mortgage interest rate of around 5.3% told Yicai that he is currently preparing to repay the loan in advance, but he has called the lending bank many times, but no one has answered. "In addition, the mortgage contract It also indicates that 3 months of interest will be charged as a penalty for repaying the loan in advance." The buyer said.
Four conditions for early loan repayment
So, under what circumstances is it most cost-effective to repay the loan in advance, and under what circumstances is it not suitable to repay the loan in advance?
First of all, the prerequisite is that there is "surplus food" in hand.
"One is the source of funds and cost of early repayment. If you happen to have a part of your own idle funds, it is not a bad idea to repay early; the second is the use of funds. The funds for early repayment should be planned for the next relatively long The money will not be used within a certain period of time.” Zheng Dayuan, general manager of Dayuan Mortgage, told the first financial reporter.
Xue Hongyan, deputy director of the Star Map Financial Research Institute, also said that housing loans are long-term loan funds, and early repayment of housing loans corresponds to long-term capital planning. Only under the premise of no large capital expenditure in the past three years and stable cash flow income, Homebuyers should consider repaying part of the mortgage early with their own funds.
Second, the mortgage interest rate is the primary consideration.
Zheng Dayuan said that if the loan interest rate is high when applying for a housing loan, it is necessary to repay the loan in advance; and if it is a provident fund loan, the interest rate is low, and the repayment in advance is of little significance.
Xue Hongyan also told China Business News that if the mortgage interest rate is higher than 5%, it is cost-effective for home buyers to repay the mortgage in advance; if the mortgage interest rate is between 5% and 4.5%, the cost performance of repaying the mortgage in advance is average; 4.5%, investors should give priority to investment and financial management. By investing in financial products, there is a high probability of obtaining a long-term rate of return higher than 4.5%. Repaying the mortgage in advance is not a good choice.
Again, whether there is a better place for the "surplus grain" should also be considered.
Zheng Dayuan said that if you can find a financial management channel with a higher interest rate than the mortgage and earn the interest rate difference, you don't need to consider repaying in advance.
Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, also said that according to the calculation of "mortgage interest rate + handling fee + property management fee + depreciation + opportunity cost", if you can't find a financial product that is higher than the cost of holding a house, then, in advance Repayment may be equivalent to financial management.
Finally, the timing of early repayment is also very important.
A popular saying in the market is that the equal principal and interest does not exceed one-third of the loan term, and the equal principal does not exceed one-fourth of the loan term, so it is more cost-effective to repay in advance.
Yan Yuejin, Research Director of the Think Tank Center of E-House Research Institute, analyzed Yicai.com, whether it is equal principal and interest or equal principal, in fact, most of the funds repaid in the first few years of the loan are interest, and the impact on the principal is It is relatively small, so if you want to decide to repay in advance, you should choose to repay in advance in the first few years of the loan, and the interest expenses in the later period will be less, which is more cost-effective.
In the middle and late stages of the loan term, since most of the interest has been repaid, the rest is basically the principal, so there is little significance in repaying the loan in advance.
"Left is also a knife, right is also a knife"
The wave of early loan repayment has intensified, which has also brought considerable pressure to banks. As we all know, housing mortgages are high-quality assets with long-term stability and the highest security among bank credit assets.
And early repayment, for the bank, will lose part of the interest income.
Then, how to relieve people from getting together to repay loans in advance, the most popular solution at the moment is to lower the interest rate of stock mortgages, and bring tangible benefits to the "high-ranking guard" crowd.
In fact, as early as the beginning of 2009, a number of commercial banks lowered the interest rates on existing mortgages.
Han Xiao, an analyst at Tianfeng Securities, believes that commercial banks may not rule out conditional discounts on existing credit in the future.
However, the current scale of existing housing loans is relatively large. Considering the impact on commercial banks, even if relevant policies are introduced, the implementation conditions may be more stringent.
In terms of specific operations, Dong Ximiao, the chief researcher of China Merchants Union Finance, suggested that the stock mortgage interest rate on January 1, 2023 is still higher than 5%, which can be divided into three levels, and preferential measures will be taken respectively: if the interest rate is higher than 6%, 15% off Or minus 100 basis points; if the interest rate is higher than 5.5%, a 10% discount or a minus 60 basis points; if the interest rate is higher than 5%, a 50% discount or a minus 30 basis points.
For the convenience of implementation, there is no distinction between the first set and the second set of housing loans, and only adjustments are made according to the interest rate.
Borrowers with overdue records do not enjoy preferential measures in principle.
All banks are allowed to moderately increase the preferential margin on the basis of the above.
However, similar to repaying loans in advance, lowering the interest rate of existing mortgages will also lose part of the bank's interest income and reduce the bank's profit margins.
"It can be said that there are advantages and disadvantages for banks. Lowering the interest rate of some existing mortgages and transferring part of the interest income can retain more customers. At the same time, this also requires the financial management department to strengthen guidance." Dong Ximiao told China Business News.
However, some experts believe that it is not feasible to lower the interest rate of stock mortgages.
Xue Hongyan said that if it is a big deal, lowering the stock mortgage interest rate will do more harm than good, and it is not feasible.
At present, the interest rate spread of the domestic banking industry is already at a relatively low position. Lowering the stock mortgage interest rate will directly reduce the level of bank interest rate spreads, affect the stability and sustainability of bank operations, and infringe the ability of the banking industry to serve the real economy with high quality. The gains outweigh the losses.
"At the same time, from a mid- to long-term perspective, 'arbitrary' cuts in stock loan interest rates will affect market expectations and confidence in the stability of bank interest rate spreads, and affect the stability of the banking industry's valuation level and refinancing capabilities." Xue Hongyan said.