2024-09-05
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bloomberg news in the us has been particularly concerned about chinese homebuyers recently! with one short essay after another, i guess the leaders of the bank of china have been sending regards to the elders of the bloomberg family in their hearts these days.
compared with the short essays from a few days ago, this time it’s more powerful!
last friday, bloomberg quoted sources as saying that china is considering further lowering the interest rates on existing mortgage loans and allowing existing mortgage loans to be converted into mortgages.yesterday, bloomberg further detailed the news, saying that financial regulators have proposed to reduce the interest rates on existing mortgages by a total of about 80 basis points. the first reduction will be in the next few weeks, and the second reduction will be at the beginning of next year. it applies to both first and second homes.
the rumors a few days ago seemed a bit true, but this 80 basis point reduction does seem a bit mysterious!
according to the people's bank of china's "china monetary policy implementation report for the fourth quarter of 2023", the interest rates of more than 23 trillion yuan of existing mortgage loans have been lowered, and the adjusted weighted average interest rate is 4.27%.(lpr for loans with a term of more than 5 years will be 4.2% in december 2023), with an average decrease of 73 basis points, reducing borrowers' interest expenses by approximately 170 billion yuan each year.
in fact, after more than a year and two interest rate cuts, the current market lpr has fallen to 3.85% for more than 5 years, a decrease of 35 basis points. in other words,the average existing mortgage interest rate before the fourth quarter of 2023 has been reduced to around 3.92%!
taking into account the different situations in different places, overall, except for first-tier cities, the existing mortgage loans in most cities are rarely above 4%. in this case, according to bloomberg's article, if the mortgage rate is reduced by another 80 basis points, it will be reduced to 3.2%?
since the implementation of the "517 new policy", the mortgage interest rates for the first and second homes of new houses have continued to decline. the "china monetary policy implementation report for the second quarter of 2024" released by the central bank shows that the weighted average interest rate of newly issued personal housing loans has been reduced to 3.45% at the end of june, and there was a 10 basis point reduction in july.
according to statistics from centaline property research institute, the average interest rate for first home loans nationwide has fallen to around 3.25% in august 2024, and the average interest rate for second home loans is 3.6%. the overall average mortgage interest rate in august was around 3.3%.
overall, mortgage interest rates have gone through multiple rounds of declines, and the extent of the adjustment varies from place to place. currently, the first mortgage interest rates in most cities have dropped to between 2.9% and 3.4%.
at present, the highest mortgage interest rates for terms of more than five years in first-tier cities are 3.4% in beijing and shanghai, and as low as 2.9% in guangzhou; second-tier cities generally have an interest rate of 3.1%, and nanjing is as low as 2.95%.
statistics from the china real estate research institute show that in august 2024, the national average interest rate for first-home mortgages had fallen to around 3.25, and the average interest rate for second-home mortgages was 3.6%.
recently, people all over the country are calling for lowering the interest rates of existing loans:
so judging from the actual market situation, the time has indeed come to lower the interest rate on "existing mortgage loans" again.
in terms of provident fund loans, on the one hand, interest rates have been lowered again and again; on the other hand, various cities have restarted and optimized the "commercial to public" business according to local conditions, and lowered loan thresholds and withdrawal conditions.
at present, more than 30 cities in jilin, henan, hunan, hebei, shandong, anhui, sichuan and other provinces have successively implemented and optimized the "commercial to public" (commercial housing loans to housing provident fund loans) policy, but among the first-tier cities, only shenzhen has started the "commercial to public" business.
one of the reasons for launching the "commercial to public" mortgage business in many places is that the interest rate spread between existing mortgage rates and new mortgage rates has widened.，except for shenzhen, the cities in china that carry out the "commercial to public" business are generally small in scale. it remains to be seen whether major cities such as beijing, shanghai and guangzhou will follow suit and implement it in the future.
after the commercial-to-public transition, the previously high-interest housing loans can be converted into provident fund loans with lower interest rates, saving the family's interest expenses. currently, the national provident fund loan interest rate for the first home of more than five years is 2.85%, which is lower than the average commercial loan interest rate.
the combined discounts of commercial loans and provident fund loans have substantially reduced the purchase cost.
first of all: there is a precedent for this in past history.
1. policy background and adjustments in 2008: - in 2008, affected by the international financial crisis, the central bank announced in october that the lower limit of commercial personal housing loan interest rates would be expanded to 0.7 times the loan base rate, and the minimum down payment ratio would be adjusted to 20%. this policy was initially aimed at new mortgages, but then triggered a series of chain reactions. - initially, the preferential policy was aimed at new mortgages, but with market competition, many small and medium-sized banks launched a 30% discount interest rate for existing mortgage customers, attracting customers through mortgage transfer services.
in early 2009, the four major state-owned banks also announced that qualified existing mortgage customers could apply for a 30% discount on interest rates. however, most banks have set certain application thresholds, such as requirements for the quality of customers' assets.
2. policies and implementation in 2023: - in late august 2023, the ministry of housing and urban-rural development, the people's bank of china, and the state administration of financial supervision jointly issued the "notice on optimizing the standards for recognizing the number of housing units in personal housing loans", and the restrictive policies during the period of overheated real estate were basically withdrawn.
starting from september 25, 2023, banks will proactively adjust the interest rates of eligible existing mortgage loans in batches. on november 6 of that year, the central bank issued a document stating that the work of lowering the interest rates of existing mortgage loans has been basically completed, with the interest rates of more than 22 trillion yuan of existing mortgage loans reduced, with an average reduction of 0.73 percentage points.
secondly: the existing mortgage loans that do not abide by the rules have long been replaced with business loans!
policies should not let honest people suffer!
as we all know, the interest rates of existing mortgage loans are generally higher than those of consumer loans and business loans. the mortgage interest rates are generally above 4%, but the business loan interest rates are basically around 3%. this has allowed "interested people" to see the so-called "business opportunities", thus giving rise to the "loan transfer and interest rate reduction" business industry chain, and a complete division of labor and profit sharing system has been formed.
data from the central bank showed that as of the end of june 2024, the balance of personal housing loans nationwide was 37.79 trillion yuan, a year-on-year decrease of 2.1%, and has continued to decline for five consecutive quarters since the second quarter of 2023. in the first half of this year, personal housing loans decreased by 380 billion yuan, while operating loans increased by 1.64 trillion yuan and consumer loans increased by 212.8 billion yuan.
the current interest rates for consumer loans and business loans have fallen below 2.8%. the phenomenon of replacing mortgage loans with consumer loans and business loans and achieving a disguised interest rate cut through the interest rate differential between loan products continues to occur, and the risks brought about by this cannot be ignored.
there is big news coming from the guangzhou real estate market: the local commercial loan interest rate has been lowered to 2.89%, and the commercial bank loan interest rate has "approached" the provident fund interest rate.
3: the benefits of reducing existing loans!
adjusting the interest rate of existing mortgage loans is a complex issue, involving multiple interests and market expectations, and indeed involves considerations at multiple levels, including economics, finance, and society.
however, what the real estate market lacks most at the moment is confidence. the purpose of stabilizing the real estate market and saving the market is to save the economy, and the most important thing for economic recovery is to stimulate consumption. if the interest rates on existing mortgage loans are lowered further, ordinary people will have more money to spend every month.
1. data from the beijing statistics bureau show that in the first half of 2024, the total profit of beijing's large-scale catering industry (i.e. annual revenue of more than 10 million yuan) was 180 million yuan, a year-on-year decrease of 88.8%, and the profit margin was as low as 0.37%.
2. according to the data from the shanghai statistics bureau, in the second quarter of 2024, the accommodation and catering enterprises with annual main business income exceeding 2 million yuan had a cumulative operating profit loss of 770 million yuan.
judging from the data collected from various aspects, the consumption of people's livelihood such as ham, pickled vegetables, melon seeds, milk, and mineral water has declined across the board, which directly sends a signal to the market that the sluggish real estate industry has led to most people tightening their belts, thus affecting terminal consumption.
the high interest rates on existing mortgage loans have indeed affected consumption, so the core need at the moment is to give the market confidence. if, as in 2009, the interest rates on existing and incremental mortgage loans are leveled across the board, the positive impact on the market will be huge.
it is inevitable that the existing mortgage rate will be lowered again, but it is unlikely to be lowered by 80 basis points. after all, the average existing mortgage rate in the current market has fallen to around 3.9, and the average interest rate for new loans is around 3.3! the interest rate spread is only 60 basis points.
just like in 2009, it is highly likely that all existing mortgages will be equalized with new mortgages, which means that most home buyers can expect their interest rates to drop to around 3.3% in the future!
banks are going to have a hard time!
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