Good news for home buyers! Record reduction, you can save more than 50,000 yuan in mortgage interest

Text/Pang Wuji

　　Homebuyers are in for a big boost.

　　On February 20, the latest loan market quotation rate (LPR) released by the National Interbank Funding Center authorized by the central bank showed that the LPR for more than 5 years was 3.95%, a decrease of 25 basis points from the previous month. This is the latest LPR adjustment. The largest drop ever.

　　Since the LPR reform in August 2019, the LPR over 5 years has been lowered a total of 8 times, and this time is the largest reduction of this indicator in the past 5 years. As one of the most important factors affecting the real estate market, what impact will the unexpected reduction in mortgage interest rates have on China's real estate market?

Reduce the burden on home buyers

　　LPR with a term of more than 5 years is directly linked to the mortgage loan. At present, most people's mortgage interest rates (except fixed interest rates) are formed by adding points on the basis of LPR with a term of more than 5 years. The cost reduction effect of this LPR interest rate cut is obvious, which will directly reduce the repayment pressure of home buyers and the cost of buying a house.

　　Zhang Dawei, chief analyst of Centaline Real Estate, said that this time the LPR of more than 5 years has been reduced from 4.2% to 3.95%. If additional factors are not considered, taking a total loan of 1 million yuan and equal principal and interest over 30 years as an example, the monthly mortgage payment will be A reduction of approximately 145 yuan, and the overall interest expense over 30 years is reduced by more than 50,000 yuan.

　　It needs to be noted that the benefits of this interest rate cut are wider. The reduction in mortgage interest rates due to the reduction in LPR applies to all home loan buyers, including second-home buyers in hotspot core cities. This group has often been excluded from supportive policies to encourage urgent needs. For example: before this interest rate cut, the mortgage interest rate for second-hand housing stock in Beijing remained at 5.35%.

　　Yan Yuejin, research director of E-House Research Institute, believes that China's real estate market is currently in the stage of stabilizing and recovering, but the recovery process needs to be consolidated. The interest rate cut is beneficial to the reduction of capital costs, which directly leads to the decline of mortgage interest rates. This interest rate cut is a relatively large reduction in burdens and will help promote mortgage applications and consumption.

　　Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, pointed out that, more importantly, under the current circumstances of significant reduction in deposit interest rates, the principal-guaranteed financial management interest rate has also dropped to a historical low, and the difference between the housing mortgage loan interest rate and the principal-guaranteed financial management interest rate The "scissors gap" has expanded, with the former basically being about twice as large as the latter. In the past, the situation where the mortgage interest was covered by buying a financial plan no longer exists.

　　When housing prices are expected to fall, it is not cost-effective to bear high interest rates to purchase this asset. Therefore, he admitted that only by lowering mortgage loan interest rates and narrowing the gap with principal-guaranteed financial management interest rates can real estate market expectations be truly stabilized.

Record cut releases strong signal

　　The record-breaking reduction in LPR also sends a strong signal to stabilize the property market and prevent risks.

　　Chen Wenjing, market research director of China Index Research Institute, pointed out that after the LPR is lowered, the current lower interest rates for first-time and second-home mortgages will be reduced to 3.75% (LPR minus 20 basis points for more than 5 years) and 4.15% (LPR plus 20 basis points for more than 5 years) respectively. basis points), further approaching the historical low. In some cities, mortgage interest rates have dropped to historical lows, and only in some areas the first-home mortgage interest rate is higher than 4%.

　　Li Yujia said that this time the LPR was reduced by 25 basis points at one time, which was the largest reduction since the LPR reform in August 2019. The reason for the substantial reduction is that on the one hand, the fundamentals of the demand side of the current property market are still weak, and residents' expectations of leveraging to purchase houses are weak; on the other hand, the large-scale, one-time reduction in mortgage interest rates at the beginning of the year also releases dividends in place and avoids " The consideration of "squeezing out toothpaste" will have a direct impact on market expectations and encourage onlookers to accelerate their entry into the market.

　　Wen Bin, chief economist of China Minsheng Bank, also pointed out that the sharp decline in LPR over 5 years is conducive to better promoting investment and consumption, better cooperating with the release of the effects of recent policies to stabilize real estate, supporting the stable and healthy development of the real estate market, and easing the risk.

The property market’s “Little Indian Spring” is expected to reappear

　　Since 2024, policies on both supply and demand sides of the real estate industry have continued to be implemented.

　　Chen Wenjing pointed out that on the demand side, before the Spring Festival, first-tier cities successively relaxed purchase restriction policies, which is a clear signal. In the future, more cities will optimize and adjust relevant policies in a timely manner based on their own conditions.

　　On the supply side, since January, the establishment of an urban real estate financing coordination mechanism has been accelerated, with various localities actively reporting "white lists" of financing support projects, and banks and financial institutions also actively connecting to stabilize the expectations of real estate companies and individual home buyers.

　　In addition, since the beginning of this year, the construction of the "three major projects" (the construction of affordable housing, the renovation of urban villages, and the construction of "both leisure and emergency" public infrastructure) has also continued to advance. Beijing, Shanghai, Guangzhou, Shenzhen, Fuzhou, etc. Local governments have successively announced the construction scale of allotment-type affordable housing in 2024 or the first batch. Hefei, Guangzhou, Nanning and other places announced the first round of urban village renovation plans, and Guangzhou issued the second batch of room tickets.

　　Under the policy combination, Chen Wenjing said that the effect of regulatory policies in core cities is expected to be strengthened, and the "Little Indian Spring" market in the property market may gradually begin.

　　Zhang Dawei also believes that the real estate market in some cities, especially first- and second-tier cities, has gradually bottomed out, and rapid stabilization of the market will be a trend. It is expected that the "Little Indian Spring" will reappear in a certain range of markets in early 2024.