Mortgage interest rate: what to do after "7 consecutive drops" this year
Statistics from third-party agencies show that since the beginning of this year, housing loan interest rates have continued to decline, and have fallen for 7 consecutive months. In the context of "housing to live without speculation", why did the mortgage interest rate "seven consecutive declines"? Will it continue to decline in the second half of the year?
"The primary reason for the decline in mortgage interest rates this year is the economic cycle and changes in the macro-control policy environment." Feng Xuming, deputy director of the Comprehensive Economic Research Department of the Academy of Finance and Economics of the Chinese Academy of Social Sciences and researcher at the China and World Economic Research Center of Tsinghua University, told Economic Daily Reporter, in fact, in addition to mortgage interest rates, the average interest rates of other major loan products are also showing a downward trend. Take the representative LPR interest rate as an example, from the fourth quarter of last year to the second quarter of this year, there was an overall downward trend. In July this year, the 1-year and 5-year LPR interest rates were 3.85% and 4.65%, respectively, down 0.3 and 0.15 percentage points from the beginning of the year.
Dong Ximiao, chief researcher of China Merchants Finance, also said that since this year, in response to the downward pressure on the economy and the impact of the new crown pneumonia epidemic, the People's Bank of China has increased liquidity, monetary policy has become more flexible and appropriate, and inter-bank funds have generally been abundant. At the same time, the People's Bank of China has reduced bank funding costs by lowering the RRR and lowering operating interest rates such as reverse repurchase and medium-term lending facilities, and promoted the continued downward trend of LPR as the benchmark for mortgage pricing.
A noteworthy phenomenon is that compared with other types of long-term loan interest rates, mortgage interest rates have fallen more significantly. For example, as of July, the 5-year LPR interest rate was reduced by 0.15 percentage points from the beginning of the year, while the mortgage interest rate with longer average maturity was reduced by 0.28 percentage points. In this regard, Feng Xuming said that this is because the current demand for corporate credit financing has weakened, causing financial institutions to face the problem of "asset shortage" to a certain extent; and mortgage assets have the advantages of lower risk and greater stability, which are usually considered It is a higher quality asset, and banks are more willing to increase housing mortgage loans. During the survey, the reporter also found that many banks said that with complete information, personal mortgages can be approved within a week.
Dong Ximiao said that since March this year, according to the deployment of the People's Bank of China, banks have started the conversion of the pricing benchmarks for stock floating-rate mortgages. Most customers will switch to using LPR interest rates as the pricing benchmark. After the LPR interest rates decline, the stock mortgage interest rates are also expected to decline.
After the "7 consecutive declines" in mortgage interest rates, will they continue to fall? In this regard, industry experts said that the continued downward trend of housing loan interest rates in the first half of this year is difficult to continue, and it is expected that it will remain basically stable in the second half of the year.
"It is expected that mortgage interest rates will continue to fall in the second half of the year, but the magnitude will be greatly reduced." Dong Ximiao said that in order to support the real economy, the Politburo meeting and the central bank's second quarter monetary policy implementation report required a significant reduction in comprehensive financing costs. It is expected that the liquidity will remain reasonably abundant in the second half of the year, the LPR interest rate will continue to fall, and the mortgage interest rate based on the LPR interest rate as the pricing benchmark will also follow the trend downward.
"China's economy has begun to gradually recover in the second quarter. With no severe epidemics in the autumn and winter of this year, it is expected that the economy will continue to pick up in the second half of the year. In this case, although the monetary policy will remain more flexible, moderate and structurally loose , But the intensity will be weakened." Feng Xuming said that the excessive growth of real estate credit may create a "crowding effect" on the financing of other entities, which needs to be avoided under the current macroeconomic situation.
According to industry insiders, in the short term, with the growth of money supply and the scale of social financing significantly higher than the nominal economic growth, real estate regulation in some cities will continue to tighten to prevent unreasonable and excessive capital inflows into real estate. The market, thereby pushing up housing prices.
Li Wanfu, an analyst at Rong360 Big Data Research Institute, said that in the second half of the year, the number of cities that issued property market control policies gradually increased. In July alone, six cities including Hangzhou, Dongguan, Ningbo, and Shenzhen introduced strict control policies. “Housing credit policies are also real estate control policies. An important part of this. The 5-year LPR offer has not changed for three consecutive months, precisely to avoid further stimulating the real estate market.”
Dong Ximiao said that in the context of the central government’s repeated emphasis on “no speculation in housing” and the lack of real estate as a means of stimulating the economy, in some hot cities where housing prices have risen too fast, if housing loans grow too fast and interest rates fall significantly, the central bank is expected to pass Window guidance, market interest rate self-discipline mechanism, etc., "In the next step, the central bank and commercial banks should comprehensively use a variety of methods according to the different areas and subjects of housing purchases, and use both volume and price, combining long and short, to regulate total volume and adjust prices. To meet rigid demand and curb investment speculation, we should focus on the present and guide expectations, and implement policies based on cities to further implement differentiated housing credit policies." (Economic Daily-China Economic Net reporter Qian Qingni)