Comments on the central bank's adjustment of the lower limit of mortgage interest rate: the signal is more meaningful and the expectations of home buyers are gradually restored
Following the positive signals released at the Politburo meeting, the China Banking and Insurance Regulatory Bureau, the central bank and the national Standing Committee have successively voiced their support for the healthy development of real estate, and the city level of "implementing policies for the city" has been upgraded to a strong second tier city; Second tier cities such as Suzhou and Hefei have issued relaxed purchase restriction policies to release stability maintenance signals to the market. As an important part of "steady growth", the real estate industry is expected to further relax the follow-up regulation measures on the premise that the early stimulus policies fail to achieve obvious results. It is expected that the market heat will hit the bottom and pick up in the third quarter, and the sector still has good investment opportunities to maintain the "look good" rating.
The central bank released financial statistics in April and adjusted the lower limit of interest rate on commercial individual housing loans for the first set of housing
(1) on May 15, the central bank announced that the lower limit of interest rate of commercial individual housing loan for the first set of housing was adjusted to not be lower than the market quotation interest rate of corresponding term loan minus 20 basis points (as of April 2022, the five-year LPR was 4.60%), and the lower limit of interest rate policy for commercial individual housing loan for the second set of housing was implemented in accordance with the current provisions (i.e. the market quotation interest rate of corresponding term loan plus 60 basis points).
(2) on May 13, the central bank released the financial statistics report for April 2022: RMB loans increased by 645.4 billion yuan in April, a year-on-year decrease of 823.1 billion yuan. Household loans decreased by 217 billion yuan, an increase of 745.3 billion yuan year-on-year. Among them, housing loans decreased by 60.5 billion yuan, an increase of 402.2 billion yuan year-on-year.
The signal of this national policy adjustment is more significant
Since the credit risk appeared in the real estate industry in the second half of 2021, the central bank has publicly stated for many times that it will promote the sound development of the real estate industry; This is its first national policy adjustment. After this adjustment, the downward floating space of mortgage interest rate of first-time home buyers was opened, and the lower limit of loan interest rate was reduced to 4.40%, providing a new means for local cities to maintain the stability of the real estate market. Looking back on the changes of the current round of mortgage interest rate, from the average of 5.74% of the first set in 50 cities of shell in October 2021 to 5.17% in April 2022, 57 BPS have been reduced in total; With the reduction of the lending cycle (from the average cycle of 77 days to 29 days), the loan conditions for first-time home buyers have been in a relatively good period in recent three years.
We judge that the mortgage interest rate in this cycle may have greater room for reduction
Referring to the past two cycles, the average interest rate of housing loans has been reduced by 140 BPS and 244 BPS respectively (from Q4 in 2011 to Q4 in 2012 and Q3 in 2014 to Q3 in 2016). From the current round of interest rate adjustment, it is only at the beginning of the adjustment. At the same time, there is a strong demand for credit from banks. As a kind of loan with low non-performing rate and high-quality collateral, we judge that there may be more room for interest rate reduction in the future.
Risk tips: (1) the industry's sales recovery and financing collection are less than expected, and the cash flow pressure of real estate enterprises increases; (2) The epidemic continues to affect consumer confidence in house purchase.
