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Chao News Client Reporter Chen Ye

On July 22, the new loan market benchmark interest rate (LPR) was announced. The one-year LPR was 3.35%, and the LPR for more than five years was 3.85%, each down 10 basis points.

On the same day, the central bank also issued an announcement stating that the interest rate of the 7-day reverse repurchase operation in the open market was adjusted from the previous 1.80% to 1.70%, which was the first adjustment since August 2023. At the same time, the 7-day reverse repurchase operation was adjusted to a fixed rate and quantity bidding.

The central bank has issued a series of important announcements. What direct impact will this have on people’s wallets?

Image source: Visual China

Many banks in Hangzhou have simultaneously lowered their mortgage interest rates

Today (July 23), Chao News reporters interviewed several banks in Hangzhou and found that some banks have quickly lowered their mortgage interest rates.

"After the adjustment on May 31, the mortgage interest rates in Hangzhou are 3.25% for the first mortgage and 3.35% for the second mortgage. Now our bank has implemented interest rates of 3.15% and 3.25% for customers who apply for new mortgages." said a staff member of Industrial Bank.

An employee of a large state-owned bank in Hangzhou said that the LPR has dropped, and mortgage interest rates have also been lowered. "Based on a commercial loan of 1 million yuan, a 30-year loan, and equal principal and interest repayment, the 10 basis point drop in the LPR will reduce the monthly payment by 57.3 yuan, and the cumulative monthly payment over 30 years will be reduced by 21,000 yuan."

Staff at Yuhang Rural Commercial Bank told reporters that most existing customers (except those whose interest rates are not adjusted under the agreement) will have their mortgage interest rates adjusted according to the latest LPR value on January 1 next year; and new customers applying for mortgages will be subject to the latest mortgage interest rate from now on.

At present, many large state-owned banks and joint-stock banks in Hangzhou have implemented new interest rates for new mortgage customers, while old customers will see a reduction in mortgage interest rates in January next year.

Deposit interest rates may start a new round of cuts

With the reduction in mortgage interest rates, citizens' loan costs are reduced, and some people who have urgent needs will consider buying a house. This is a real benefit for home buyers.

However, interest rate cuts also often mean that banks' deposit rates may start a new round of cuts.

"Our bank is a member bank of the interest rate self-regulatory mechanism. Such banks will refer to the 10-year treasury bond yield and the 1-year LPR to reasonably determine the deposit interest rate level, but the self-regulatory guidance is'Flexibility'Not all institutions will adjust, but the decline in LPR is definitely an important signal of interest rate cuts. ” A staff member of a joint-stock bank in Hangzhou told reporters.

An employee of a large state-owned bank in Hangzhou said that if the LPR is lowered by 10 basis points, there is a high probability that deposit rates will also be further adjusted. "At present, the quota of large-denomination certificates of deposit will also become tight, and citizens should buy them and cherish them," the employee added.

"We haven't received any notification from the head office regarding adjustments to deposit interest rates yet, but there is a high probability that they will be lowered in the future," said a customer manager at another joint-stock bank.

Chao News reporter checked the official websites of Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China, and found that the current interest rates for three-year time deposits of the above state-owned banks are 1.95%, and 2.0% for five-year time deposits. Once the deposit interest rates are lowered, it may be impossible to find products with time deposit interest rates above 2% in state-owned banks in the future.

Dong Ximiao, chief researcher of CCB, said in an interview with Chao News that the LPR will inevitably put pressure on the net interest margin of commercial banks if it falls again. However, under the circumstances that the financial management departments have rectified the illegal manual interest payment in the early stage, banks have taken the initiative to reduce deposit interest rates, and the policy tool interest rates have been lowered, the pressure on the decline of the bank's net interest margin is relatively controllable. "In the next step, banks may take more measures, including lowering deposit interest rates, to continue to reduce funding costs, strive to keep the interest rate spread basically stable, and maintain the strength of serving the real economy." Dong Ximiao pointed out.