LPR remains unchanged for the 10th consecutive month, the 1-year period is still 3.85%

The LPR remains unchanged for 10 consecutive months and the 1-year term is still 3.85%

　　As expected by the market, LPR remained unchanged this month.

On February 20, the Central Bank authorized the National Interbank Funding Center to announce that on January 20, 2021, the quoted interest rate (LPR) of the loan market was 3.85% for 1-year LPR and 4.65% for LPR over 5-years. This is already LPR remained unchanged for the 10th consecutive month.

People in the industry generally believe that the stability of LPR is in line with the monetary policy tone of "adhering to the word'stability' and not making a quick turn".

　　Since the reform in August 2019, LPR has made 19 quotations.

Before the reform, the 1-year LPR was 4.31%.

On August 20, 2019, the 1-year LPR and the 5-year or more LPR reported 4.25% and 4.85%, respectively.

Subsequently, the 1-year LPR was reduced by 5 basis points in September 2019, 5 basis points in November of that year, 10 basis points in February last year, and another 20 basis points in April. They have remained unchanged since May last year. , Which is a cumulative reduction of 40 basis points from the August 2019 quotation.

After the 5-year LPR was first announced in August 2019, it was adjusted down by 5 basis points in November of that year and February last year, and another 10 basis points in April. It has not changed since May last year, compared to 2019. Quotations in August were reduced by 20 basis points, from 4.85% to 4.65%.

　　Starting this year, the applicable interest rate for most existing mortgage customers is directly linked to LPR.

For them, the lower LPR will really affect their monthly monthly payment.

According to estimates, after a 30-year loan of 1 million yuan for the first home, the interest rate is reduced by 20 basis points, the monthly monthly payment can be reduced by about 120 yuan.

　　The market has already expected that the current LPR offer will remain unchanged.

MLF (Mid-term Lending Facility) operating interest rate is the reference basis for 1-year LPR quotations.

Since September last year, the two have been keeping synchronized adjustments.

On February 18, the central bank announced the implementation of a one-year MLF operation of 200 billion yuan, and the winning interest rate was 2.95%, the same as in January.

　　In addition, the central bank's recent statements have also increased the market's understanding of the word "stable".

Observed

Is there an inflection point in liquidity?

　　Data show that in December, M2 increased by 10.1% year-on-year, 0.6 percentage points lower than the previous month, and social financing increased by 13.3%, following the October peak of 13.7%, which fell for two consecutive months.

Although there are consistent expectations for the stability of LPR, the market has been discussing whether there will be a turning point in liquidity in the near future.

Many experts believe that the liquidity in the first four months of this year should be relatively stable and will not shrink significantly.

　　The Guotai Junan Research Report believes that the central bank’s recent “locking in terms of length and weakness” is not necessarily a turning point in monetary policy, but it does show the central bank’s concerns about and correction of excessive liquidity.

Monetary policy in 2021 will show a state of easing first and then exit. Constrained by the current credit environment and economic situation, the pace of monetary policy withdrawal (new inflection point) will not be fast, and the overall liquidity in January-April should be unharmed.

However, with the release of April economic data in May, greater inflationary pressures may lead to a shift in monetary policy.

　　Hue, chief economist of Founder Securities, said that from the recent central bank statement, reverse repurchase operations may maintain a high frequency state, mainly to strengthen the position of reverse repurchase interest rate as the market interest rate center, and stably release the signal of market interest rate center.

Liquidity is still in a very gradual and gentle tightening process.

Taking into account that the economic situation in the first quarter is expected to be relatively strong, and the amount of credit issued in April and May 2020 is relatively large, the obvious contraction of general liquidity may still be from the end of the first quarter to April and May.

It is still relatively stable, and it is not the time for a significant contraction.

　　Text/Reporter Cheng Jie