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with the arrival of the traditional peak season of september and october during the national day holiday, existing housing loans have become a hot topic in the market.

on september 5, online news said that the icbc, china merchants bank and other major banks’ apps were testing the “existing mortgage interest rate adjustment” function. a cailian reporter consulted the customer service of icbc and china merchants bank and received a response that the application port for adjusting the existing mortgage interest rate was set up last year for the unified adjustment of existing mortgage interest rates, and was not the latest one to be launched.

however, the attention on existing mortgage loans has not diminished.

this monday, in response to market rumors last friday about the liberalization of mortgage transfer business, china merchants bank president wang liang said that the bank has not yet received opinions from macro-management departments, the people's bank of china or the state administration of finance, nor has it sought opinions from commercial banks and other parties.

however, wang liang believes that once such policies are introduced, it will have a negative impact on the existing mortgage interest rates of the banking industry. he believes that the macro-management department will do a good job of demonstration and research before introducing similar policies.

on september 5, a business person from a major bank told cailianshe that mortgage transfer is currently only available in shenzhen and is limited to commercial loans to provident fund loans. mortgage transfer involves settling the original mortgage contract and then applying for a new mortgage from another bank. if there is no unified policy, it can only be regarded as a mortgage loan operation.

on september 4, xiao jinchuan, co-chief macro analyst at west china securities, believed that the politburo meeting in july this year proposed "early preparation and timely introduction of a batch of incremental policy measures". referring to the reduction in interest rates on existing mortgage loans in august-september last year, there is a possibility of reducing interest rates on existing mortgage loans in the future.

the existing mortgage loans have been reduced once, with significant results

many of the above-mentioned banking professionals mentioned that last year the central bank had uniformly guided banks to lower the interest rates of existing housing loans.

a report released by cicc on september 2 showed that in october 2023, the interest rate of existing mortgage loans will be lowered to no less than the lower limit of the city's interest rate at the time of issuance. according to statistics from the people's bank of china, the interest rates of more than 22 trillion yuan of existing mortgage loans will be lowered (accounting for about 60% of existing mortgages), with an average decrease of about 70bp, involving more than 50 million households and 150 million people, reducing borrowers' interest expenses by 160-170 billion yuan each year.

on august 30, a personal loan officer from a major bank's shenzhen branch told cailianshe that if mortgage transfers are allowed, it may involve competition among peers and even price wars, which may make it more difficult for banks to operate. however, the interest rate on existing loans should be lowered, which will be good for the bank's interest margin and mortgage pressure.

liang fengjie of zheshang securities believes that considering the strong calls from residents to lower mortgage rates, residents' interest burden is still heavy. it is estimated that the current interest cost of bank mortgage stocks is about 4.14%, compared with the 3.45% of new mortgage rates issued in june, there is still room for reduction. taking all factors into consideration, it is possible to reduce the interest rate of existing mortgages, but it is not necessarily allowed to transfer mortgages. it is more likely to reduce the existing mortgage markup.

cicc analyst lin yingqi calculated that based on a mortgage loan of 1 million yuan and equal principal and interest repayments, a 70bp reduction in the existing mortgage rate is estimated to reduce the borrower's monthly payment by about 400 yuan, saving about 5% of the monthly payment and total repayment amount.

on september 4, xiao jinchuan of west china securities believed that lowering the interest rates on existing mortgage loans could also curb the pressure of early loan repayment.

according to the central bank's "regional financial operation report", the amount of early repayments of personal housing loans nationwide reached 432.45 billion yuan in august 2023. from september to december after the policy was introduced, the average monthly early repayment amount of housing loans dropped to about 387 billion yuan, a decrease of 10.5% from august.

xiao jinchuan said that in regions where interest rates were cut significantly, such as hubei, henan and jiangxi, the amount of early loan repayments fell by 42.1%, 27.5% and 22.2% respectively, which was higher than the national average.

the reduction of 37.8 trillion yuan of existing mortgage loans will boost consumption and the economy

from the perspective of stimulating consumption and the economy, xiao jinchuan found that in the fourth quarter of 2023, the consumption propensity of urban residents nationwide was 3.7 percentage points lower than the same period in 2019. however, among the regions with more interest rate cuts, hubei and jiangxi were 2.4 percentage points and 1.3 percentage points lower than the same period in 2019, respectively. this shows that the two regions with the largest reduction in the interest rate of existing mortgage loans have a relatively faster recovery in their residents' consumption propensity.

the political bureau meeting in july this year proposed "making preparations early and launching a batch of incremental policy measures in a timely manner". referring to the reduction in interest rates on existing mortgage loans in august and september last year, there is a possibility that the interest rates on existing mortgage loans will be reduced in the future.

xiao jinchuan estimates that based on the scale of existing mortgage loans of 3.78 trillion yuan in the second quarter of 2024, the mortgage interest that the household sector needs to repay each year can be reduced by up to about 300 billion yuan.

cicc's lin yingqi assumed two policy scenarios. assuming that the interest rates of all mortgage loans are lowered to the level of newly issued interest rates and that the scope of mortgage transfers only includes first-home mortgages, the interest expenses of lenders can be reduced by 240 billion and 200 billion respectively.

on the other hand, deposit rates may be reduced in tandem. liang fengjie believes that considering the high interest margin pressure on commercial banks, if the mortgage interest rate is reduced, it is expected that the deposit cost will be reduced to offset the bank's interest margin pressure. according to calculations, a 5-17bp reduction in deposit costs can completely offset the impact of the existing mortgage interest rate cut.