Text/Pang Wuji

　　Borrowing money is not easy, is it not easy to pay back?

　　Recently, it is really not so easy for those who want to pay off their mortgage early.

　　On the one hand, the waiting time in line is long.

Home buyers in many places have revealed that they need to wait in line for 2-5 months before they can get their repayment quota.

A reporter from the China News Agency called the Beijing branches of the Agricultural Bank of China and the Bank of China, and was told that they would have to wait in line for about 2-3 months.

　　On the other hand, some banks have to "scramble for an account" at a fixed time every day to make an online appointment for early repayment, and they have to wait for 2-3 months to get it.

There are also some banks that have closed the online appointment channel and can only negotiate offline.

Other banks require some liquidated damages.

Why everyone is busy "early repayment"

　　According to the analysis, there are three main triggering factors:

　　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 home buyers 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%.

In this context, some people regard early mortgage repayment as a financial product.

　　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 at the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, 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 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.

Is it worth paying off your mortgage early?

　　For banks, it is not happy to see residents getting together to repay their mortgages ahead of schedule.

　　In recent years, the bank's loan interest rate to the real economy has dropped significantly, and residential mortgage loans have become long-term stable high-quality assets with relatively high yields.

Li Yujia pointed out that 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.

　　Now that the difficulty is increasing, is it still necessary to return the house in advance?

The king of the country has come in the "mortgage interest rate "3 era"!

Do you want to pay off your mortgage early?

"In the article, I listed the most cost-effective situations for repaying the mortgage in advance, and also suggested some scenarios where the necessity of repaying the mortgage in advance is not so great, and the same content will not be repeated.

From the perspective of interest repayment, industry insiders suggest that when the repayment period of equal principal and interest does not exceed 1/3 of the repayment period, and the repayment period of equal principal does not exceed 1/2 of the repayment period, it is more cost-effective to repay the loan in advance .

　　If you can't repay the loan in advance due to various reasons, will it be a waste of money?

　　Not so.

　　One of the most powerful arguments used to persuade many people to buy a house with a loan in the past comes from: "A mortgage may be the largest, low-interest, and long-term loan that ordinary families can get in a lifetime."

And because of inflation, the mortgage depreciates together with the money in our hands every year. After 10 or even 20 years, the same monthly payment will greatly reduce the pressure.

　　Of course, the expectation of rising housing prices has now been broken, and there is a possibility that houses and notes will depreciate in the future.

However, referring to the financial history of Western countries, cash has the largest depreciation compared with various assets, which means that overall, the depreciation of bills may be greater than that of houses.

　　How to estimate the specific figures?

In fact, the officially announced CPI level is not the only criterion for measuring the level of inflation, because it does not include changes in housing prices, and there is a certain gap between it and the actual experience.

　　Han Xiuyun, an associate professor at the Department of Economics, School of Economics and Management, Tsinghua University, pointed out that the real inflation calculation is M2 growth rate minus GDP growth rate.

In the past one or two years, this value has been around 6%-7%.

If calculated on this basis, the current monthly repayment is 10,000 yuan, the actual monthly repayment pressure will be equivalent to the current 4,800 yuan in ten years, and the current monthly repayment pressure will be equivalent to about 1,000 yuan in 30 years.

　　Right now, this "early loan repayment tide" reflects the current lack of investment channels, and it may not be a kind of "stress response" of people at the bottom of the economic cycle.

But "winter" will always pass. When the spring is warm and the flowers bloom, keeping some available cash on hand may not be a choice to meet future opportunities.