Key points of the report:
Lowering LPR itself means that the economy is under some pressure:
1) in terms of monetary policy, compared with the offensive policy of quantity, the defensive effect of price policy is relatively strong, that is, the increase of investment volume can expand credit, while the decrease of price can only hold the cash flow risk for enterprises;
2) of course, for some subjects whose financing costs are more subject to the policy, the price policy will also have some credit easing effects, such as residents’ mortgage loans.
Therefore, the reduction of LPR is more likely to be aimed at real estate:
1) among the five-year loans, residents’ mortgage loans should have accounted for the vast majority. Therefore, this LPR adjustment only reduced the five-year LPR interest rate;
2) this is the same as the reduction of the lower limit of the first house loan interest rate last weekend, that is, we hope to make more residents enter the real estate market through the reduction of the transaction threshold;
3) of course, the reduction of LPR is also slightly compensatory. In the previous rounds of LPR interest rate adjustment, the reduction range of 1-year LPR is significantly higher than that of 5-year LPR. This time, only the 5-year LPR interest rate has been reduced, which is also a repair to the LPR interest margin.
However, the frozen real estate market may not be able to melt:
1) no matter what the original intention of this round of decline in real estate sales is, it seems that residents’ expectations of house prices are declining, and the proportion of expected house price rise in the future will return to the low point in 2015;
2) if the house price is expected to suffer losses, it is difficult to compensate for the decline in mortgage interest rate, which is a point that the policy is difficult to reverse;
3) in addition, the effect of using price policy for the first house may not be great, and the sensitivity of demand to price is low.
The reason why the previous easing of monetary policy was effective for real estate is that real estate is still in the seller’s market:
1) once the monetary policy becomes loose, more loanable funds will be released. At this time, what drives the rise of real estate sales is that banks can lend more mortgage loans, rather than the decline of mortgage interest rate;
2) this means that once monetary policy can have an impact on the real estate cycle, the premise must be that the real estate is in the seller’s market. However, judging from the current 16 month decline in interest rates and real estate sales, the state of the seller’s market may have been reversed.
It is true that there may be some signs of improvement in short-term real estate sales. The reason is that the impact of the epidemic on the real estate is alleviating with the improvement of the epidemic and the recovery of traffic, but the original cycle track of the real estate has not yet shown signs of stabilizing.
In terms of macro-economy and asset allocation, perhaps the decline of LPR and mortgage interest rate can not change too much:
1) even if the real estate sales improve, according to the experience that the previous sales are about two quarters ahead of the investment, the stabilization of investment must wait until the end of this year. At least this year, it is difficult for the real estate to make a positive contribution to the economy. Moreover, even if there is sales repair in this round, the time difference between sales and capital expenditure is not necessarily only two quarters;
2) the prerequisite logic of interest rate reduction for interest rate debt is the redistribution of bank funds between credit and debt purchase (the credit interest rate decreases, and banks transfer more funds into debt distribution). However, under the current state of asset shortage, the impact of this force on interest rate debt should be very weak.
