On May 20, after the quoted market interest rate (LPR) of loans with a term of more than 5 years was cut by 15 basis points to 4.45% than expected, the housing loan interest rates in cities across the country were reduced accordingly.
On May 23, the Chinese reporter of Securities Times securities company called several local branches of large state-owned banks in first tier cities such as Beijing, Guangzhou, Shenzhen and Shanghai. Relevant staff confirmed to the reporter that with the reduction of LPR over five years, the bank has reduced the mortgage interest rate by 15 basis points. Taking Beijing as an example, the interest rate of the first house loan decreased from 5.15% to 5%, and the interest rate of the second house loan decreased from 5.65% to 5.5%.
It is worth noting that the current pricing mechanism of individual housing loan interest rate is usually determined by adding (subtracting) different base points on the basis of LPR over 5 years. The central bank and the China Banking and Insurance Regulatory Commission shall specify the lower limit to be observed throughout the country. On this basis, all localities also formulate the lower limit to be observed by banks within their jurisdiction due to urban implementation policies.
on May 15, 5, the central bank and the China Banking and Insurance Regulatory Commission announced to cut the lower limit of the interest rate of the first house loan newly issued, from not less than the LPR of the corresponding period to not less than the LPR of the corresponding period by 20 basis points, calculated as 4.4% according to the LPR of more than five years (4.6%) released on April 20. Since then, Tianjin and other places have followed suit to cut the interest rate of the first house loan, but Beijing, Guangzhou, Shenzhen and other first tier cities have not followed up, This has further widened the gap between the interest rate of the first house newly issued in the first tier cities and other regions. The 15 basis points reduction in the five-year LPR is a national adjustment, and the lowest interest rate of the first mortgage newly issued in some regions can be as low as 4.25%
Insiders interviewed by the reporter believe that the signal of mortgage interest rate adjustment is more significant, because most cities have not implemented the minimum standard of reducing the lower limit of the first mortgage interest rate, and only cities with sluggish property market transactions have implemented the policy of “interest rate reduction + standard reduction”. Not only the interest rate of the first mortgage newly issued needs to be reduced, but also the interest rate of the existing mortgage needs to be reduced. In addition, the market is more expected to see the adjustment of the identification standard of the second house and the reduction of the corresponding interest rate, so that the market can accelerate and stabilize.
first tier cities’ mortgage interest rates will be lowered accordingly
On May 23, the Chinese reporter of Securities Times securities firm called several local branches of large state-owned banks in first tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. The relevant staff confirmed to the reporter that the mortgage interest rate of the bank also decreased with the reduction of more than five-year LPR by 15 basis points to 4.45% on May 20.
Taking Beijing as an example, the current policy is that the interest rate of the first house loan is more than 5-year LPR + 55 basis points, and the interest rate of the second house loan is more than 5-year LPR + 105 basis points.
On May 23, the staff of a branch of BOC in Beijing told the reporter of Securities Times Securities Company China that the bank had implemented the new LPR with a term of more than five years, and the interest rate of the first house loan decreased from 5.15% to 5%, and the interest rate of the second house loan decreased from 5.65% to 5.5%. The staff of a branch of ICBC in Beijing also said that at present, the interest rate of the first house loan is 5%, and the interest rate of the second house loan is 5.5%.
In addition, the reporter called several banks and learned that Shanghai some banks reduced the first mortgage interest rate from 4.95% to 4.8%, and the second mortgage interest rate from 5.65% to 5.5% Guangzhou some banks reduced the interest rate of the first house loan from 5% to 4.85%, and the interest rate of the second house loan from 5.2% to 5.05% Shenzhen some banks reduced the first mortgage interest rate from 4.9% to 4.75%, and the second mortgage interest rate from 5.2% to 5.05%.
In addition, the reporter learned that the first tier cities such as Beijing and Shenzhen did not participate in the reduction after the central bank and the China Banking and Insurance Regulatory Commission announced the reduction of the lower limit of the first mortgage interest rate on May 15.
On May 23, the customer manager of a branch of BOC in Shenzhen also told reporters that at present, the bank has not followed up to reduce the lower limit of the first mortgage interest rate, and whether it will adjust in the future is still waiting for notice. The staff of a branch of China Construction Bank in Shenzhen also said that the bank did not follow up and adjust the policy.
more than the first mortgage interest rate fell to 4.25%
The reporter previously learned that on May 15, the central bank and the China Banking and Insurance Regulatory Commission announced to reduce the lower limit of the first mortgage interest rate to the corresponding period. After the LPR was reduced by 20 basis points, the lower limit of the first mortgage interest rate was calculated as 4.4% according to the LPR over 5 years (4.6%) released on April 20. Subsequently, Tianjin, Suzhou, Jinan, Qingdao and other places reduced the first mortgage interest rate to 4.4%.
Taking Tianjin as an example, the reporter learned that a number of banks began to implement the first mortgage interest rate of 4.4% from May 18, and with the 15 basis points reduction of the five-year LPR released on May 20, the first mortgage interest rate in Tianjin decreased again.
On May 23, Bank Of China Limited(601988) the account manager of a sub branch in Tianjin told reporters that at present, for newly issued loans, the interest rate of the first house loan is 4.25%.
In this regard, Yan Yuejin, research director of the think tank center of E-House Research Institute, said in an interview with the securities times that Tianjin’s great efforts to reduce the mortgage interest rate is essentially to better protect the demand for rigid demand and improved house purchase, which plays a positive role in boosting the market and is bound to reverse the downturn of the real estate market. At the same time, the reduction of mortgage interest rate is rapid, clear and unified, and the market expectation will obviously be affected, creating better conditions for local governments, real estate enterprises, banks and home buyers to reassess the trend of the real estate market.
In addition, with the 15 basis points reduction of LPR over five years on May 20, Suzhou, Jinan, Qingdao and other cities can implement the first house loan interest rate as low as 4.25% as Tianjin.
However, Zhang Dawei, chief analyst of Centaline real estate, said in an interview with the securities times that after the central bank issued the policy, many cities reduced the interest rate of the first set of housing loans from the previous 4.6% to 4.4%, and then to 4.25%. The main reason is that the transaction volume of the real estate market in these cities is low and the demand for housing loans is low. From the perspective of impact, on the one hand, the reduction of new loan interest rate is indeed conducive to the entry of rigid demand into the market, but for the stock rigid demand with an interest rate of 5% to 6% over the past year, it should also be reduced to truly affect the market. In addition, not only the interest rate of the first house loan is reduced, but also the market expects to see the adjustment of the identification standard of the second house, including the interest rate should also decline, so that the market can be stable.
Zhang Dawei also pointed out that most cities have not implemented the minimum standard of reducing the lower limit of the first mortgage interest rate. Only cities with low property market transactions have implemented the policy of “interest rate reduction + standard reduction”, and the signal significance of mortgage interest rate adjustment is greater than the actual significance
