Beijing, 3 Mar (ZXS) -- On 20 March, the People's Bank of China authorized the National Interbank Lending Center to announce the latest loan market quotation rate (LPR): 20.1% for 3-year LPR and 65.5% for LPR over 4 years, both unchanged from last month. LPR has remained unchanged for seven consecutive months.
After the central bank lowered the RRR more than expected on March 3, it triggered market speculation about whether the LPR can be lowered this month. Wen Bin, chief economist of China Minsheng Bank, pointed out that LPR quotations continued to "stand still" on March 17, holding steady for seven consecutive months since the asymmetric downward revision in August last year. This is mainly related to factors such as the unchanged policy interest rate such as MLF (medium-term lending facility), the rapid rise of market interest rates that has led to a sharp increase in the cost of bank liabilities, and the further pressure on the net interest margin of banks under the superposition of the two ends of capital and burden, and there is no basis and space for corresponding downward adjustment of LPR quotations.
Mortgage interest rates also remained basically stable during the month. According to data released by the Shell Research Institute on the same day, the interest rate of the first home loan in China's 3 cities in March fell slightly by 2 basis points from the previous month, and the interest rate of the second home loan was the same as the previous month; The average lending cycle was shortened to 21 days, the fastest pace since January 2019.
It is worth noting that under the dynamic adjustment mechanism of the first set of housing loan interest rate policies, the number of cities with interest rate cuts in March decreased. According to the statistics of the Shell Research Institute, only 3 third- and fourth-tier cities have seen their first home loan interest rates fall, while the first and second home loan interest rates in first- and second-tier cities have remained unchanged. As of March 10, 3% of first-home mortgage interest rates in second-tier cities were below 16.45%, and 4% of first-home mortgages in third- and fourth-tier cities had interest rates below 1.39%. The current level of mortgage interest rates continues to be low.
For mortgage interest rates to remain stable, Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Urban Planning Institute, said that since the second half of 2021, the interest rate of China's first home mortgage loan has fallen by 150 to 200 basis points, but market sales have not rebounded significantly. Fundamentally, the current interest rate cuts are less significant for home buyers to save monthly payments (such as reducing monthly payments by a few hundred dollars). Because, what restricts their purchase is more high down payment and total monthly payment, behind which is the decline in residents' expectations of the real estate market. Reducing LPR is a demand-side policy, and what is more needed is the policy efficiency of the supply and demand sides, such as increasing the preparation of guaranteed rental housing, and stabilizing employment and income on the residential side.
Associate Professor of Applied Economics at Peking University's Guanghua School of Management believes that although the LPR was not adjusted in March, there is still the possibility of a downward revision throughout the year. The reduction of LPR requires a reduction in the cost of funds of banks as a premise, and the recent reduction of the central bank's RRR has reduced the cost of funds for banks. However, the exact timing of the rate cut remains to be seen. (End)