research conclusion
Event: on December 20, 2021, the national interbank lending center announced the loan market quotation interest rate (LPR): the one-year LPR was 3.8%, the previous value was 3.85%; the five-year LPR was 4.65%, the previous value was 4.65%.
The 1-year LPR is reduced this time, The driving force may come from: (1) the two standard cuts in July and November this year saved about 28 billion yuan in capital costs for banks, and the decline of debt end costs pushed banks to reduce and increase points; (2) the implementation of "continuously releasing the potential of quotation interest rate reform in the loan market and promoting the steady decline of comprehensive financing costs of enterprises" According to this requirement, at present, the entity financing cost shows an upward trend. The weighted average interest rate of loans in the third quarter is 5%, an increase of 7bp over the previous quarter; (3) The central economic work conference proposed "steady growth" and "appropriate policy development". Under the background of weak credit growth and insufficient real financing demand, the credit stabilization policy is overweight, and financial institutions transfer profits to entities by reducing LPR interest rates to promote real financing demand.
How to treat the non adjustment of 5-year LPR interest rate? The real estate market is sensitive to the 5-year LPR interest rate. The 5-year LPR interest rate has not been lowered this time. We think this signal is worthy of attention:
First of all, the tone of "housing without speculation" has not changed. "Supporting the commercial housing market to better meet the reasonable housing needs of buyers" is an emphasis on the attribute of "housing", not a change in the attitude towards "speculation". The policy signal released by the reduction of five-year LPR interest rate may be too strong. At this stage, the local means of "implementing policies according to the city" are still the main means of adjustment, taking Hai'an, Jiangsu as an example, The Interim Measures on promoting the overall planning of urban and rural areas and improving living conditions issued by it proposed that families with two or three children who meet the requirements should be given a certain degree of benefit subsidy per square meter when buying a house; Wuhu recently issued the detailed rules for the issuance of house purchase subsidies for young talents in Wuhu. Qualified young talents can receive up to 10% house purchase subsidies; Guilin issued several incentives for Guilin to increase support for key industries and sprint for economic work in the fourth quarter, which subsidized buyers of new commercial houses in Wucheng District, and rewarded real estate development enterprises for their business contribution, etc.
Secondly, the interest rate cut is to guide the adjustment of LPR by reducing the reserve requirement to save the bank's debt end cost, rather than reducing the MLF interest rate. The synchronous adjustment of the 5-year LPR interest rate may put great pressure on the narrowing of the bank's net interest margin, but affect the effect of stabilizing credit.
Interest rate cut is a relatively strong easing signal, and the growth rate of social finance is expected to pick up from the end of this year to next year: from the past several cycles of interest rate cut and reserve requirement reduction, the growth rate of social finance has picked up. Since October, driven by the postposition of special bonds, social finance has shown signs of stabilizing. Next year, the central bank stressed "enhancing the stability of total credit growth", and the subsequent growth rate of social finance is expected to further pick up, providing room for the main means of stabilizing growth such as real estate and infrastructure.
Risk tips:
The rapid spread of the mutant virus has led to great pressure on steady economic growth and accelerated the pace of monetary policy easing;
Global inflation exceeded expectations and overseas interest rate hikes were expected to increase.
