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the topic of "reduction in interest rates on existing mortgage loans" has once again sparked heated discussions among netizens.

the news hotly discussed in the market mainly includes two aspects. last week, there was news that the relevant parties were considering further lowering the interest rates of existing mortgage loans, allowing existing mortgage loans with a scale of up to 37.8 trillion yuan to seek mortgage transfer; this week there were rumors that the interest rates of existing mortgage loans will be reduced by about 80 basis points, and the reduction will be completed in two stages. it is expected that the fastest reduction will take place in a few weeks, with a reduction of 20 to 50 basis points.

however, the relevant news has not been officially confirmed, and the bank’s public response has been that it has not received any information that the interest rates on existing mortgage loans will be lowered.

on september 5, zou lan, director of the monetary policy department of the people's bank of china, stated at a press conference held by the state information office that in terms of interest rates, the central bank continued to promote a steady decline in the overall social financing costs. at the same time, it should also be noted that due to factors such as the diversion of bank deposits to asset management products and the narrowing of bank net interest margins, there are still certain constraints on further downward movement of deposit and lending rates.

so, how likely is it that the interest rates on existing mortgages will be lowered? if so, how will they be adjusted? what impact will lowering the interest rates on existing mortgages bring?

reduced againofthe possibility does exist

as the discussion on "reduction of interest rates on existing mortgage loans" heats up, reporters have noticed that many research institutions have recently conducted in-depth analysis on this hot topic.

on september 6, tianfeng securities released a research report analyzing the impact of changes in mortgage policies and interest rates on existing mortgage rates in 2024. the research report pointed out thatthere is a possibility of lowering the interest rates on existing mortgage loans.the mortgage policy adjustment aims to stabilize the real estate market and promote the steady and healthy development of the economy. against the backdrop of global economic recovery, lowering the interest rates on existing mortgages will help ease the burden on home buyers and boost market demand.

orient securities mentioned in a recent report that although it is currently impossible to determine the possibility and specific pace of further reductions in existing mortgage rates,compared with the situation in 2023, there is still room for the policy on existing mortgage interest rates.

its analysis mentioned that looking back at the whole year of 2023, the lpr for terms of more than 5 years will be reduced by 10bp; the interest rate of existing mortgage loans will drop by 73bp. if the impact of the reduction in the interest rate of existing mortgage loans on the overall mortgage loans is calculated based on the balance of personal housing loans of 3.8 trillion yuan at the end of 2023, the average interest rate will drop by about 40bp, combined with the reduction in lpr.the mortgage rate in 2023 is equivalent to a drop of 50bp.

since 2024, the lpr for maturities of more than 5 years has been lowered twice. at the beginning of the year, the step size of the lpr reduction was increased to 25bp, from 4.20% to 3.95%, breaking 4; in july, the lpr was lowered by 10 basis points to 3.85%.a total of 35bp has been reduced this year.in the package of real estate policies issued on may 17 this year, the lower limit of mortgage interest rates was canceled at the national level and the regulatory power was given to local governments. this is beneficial to new mortgage loans, but existing mortgage loans have not benefited. the interest rate spread between existing mortgage loans and new mortgage loans is still widening.

"since 2024, the interest rate spread between existing and new mortgage loans has continued to widen, and residents have increased their early repayments and forced loan suspensions, leading to a growing call for lowering existing mortgage rates." ren zeping, a well-known economist, also commented that it is recommended to speed up the introduction of plans and details to lower existing mortgage rates. at the same time, policy incentives can be given to banks that lower existing mortgage rates, such as targeted reserve requirement ratio cuts and subsidies for structural monetary policy tools.

expected downgrade spaceabout 50-100bp

this week, unconfirmed market news came out that the work of lowering the interest rates on existing mortgage loans may still be in progress and may be reduced by 80 basis points in the future. this news also triggered a discussion in society on "how to lower the interest rates on existing mortgage loans in the future."

"if calculated according to this kind of reduction, the monthly payment for a mortgage loan with equal principal and interest for 30 years and a loan principal of 1 million yuan can be reduced by about 480 yuan. if it can indeed be done in this way, it will exceed the reduction in the interest rates of the previous round of existing mortgage loans and will also have a very good burden-reducing effect," said yan yuejin, deputy director of the shanghai e-house real estate research institute.

guosheng securities believes that there is indeed a need and room for the existing mortgage interest rates to be lowered at this stage. it pointed out in its report that there is still room for the existing mortgage interest rates to continue to adjust, and the room for reduction is based on the current gap between new issuance and existing mortgages.it is judged to be about 50-100bp, and it is expected that there is a high probability of a reduction in batches. the specific adjustment still requires the market-oriented cooperation of banks, so it will take some time to be implemented, and the adjustment process will also take time.

regarding the possible adjustment of the current round of existing mortgage interest rates, ren zeping pointed out that according to the china regional operation report 2024, the average decline in the previous round of existing mortgage interest rates in september 2023 was about 73 bp. however, according to data released by the state financial regulatory administration, the net interest margin of commercial banks in the second quarter of 2024 was 1.54%, which was already at a relatively low level, significantly lower than the 1.74% level in the second quarter of 2023.it is expected that the current round of reduction will be in the range of 60-80bp，currently, the total amount of existing mortgage loans in the country is about 3.8 trillion yuan. if it is reduced according to this plan, mortgage borrowers may save 228 billion yuan to 304 billion yuan in interest expenses each year.

he also mentioned that there are two ways to reduce the mortgage rate. the direct way is to change the contract terms, that is, the bank and the home buyer negotiate and change the contract content to reduce the mortgage rate. the other indirect way is to "replace the old with the new", that is, loan replacement and "mortgage transfer". the home buyer reapplies for a housing loan and repays the previous high-interest mortgage at the same time. at present, whether it is possible to "transfer mortgages" across banks is still uncertain and a specific plan is urgently needed.

the adjustment can reduce residents' pressure but may be bad for banks

there is no doubt that no matter how much the interest rate on existing mortgage loans is reduced, any form of interest rate cut will effectively reduce the financial burden on residents.

mr. lu, who bought a house in shenzhen in early 2023, told reporters that his current existing mortgage interest rate is still 4.25% (lpr+30bp), while shenzhen’s current first-home mortgage interest rate has dropped to 3.4% (lpr-45bp), a difference of 0.85%. even if the lpr is adjusted to the lowest level on the repricing date at the beginning of next year, his mortgage interest rate will still be 4.15%, which is a very obvious difference from the interest rate of new mortgages.

as the interest rate of the existing mortgage is too high, he also has the idea of ​​paying off the loan in advance. if the interest rate of the existing mortgage can be lowered, his family expenditure costs will also be reduced.

in addition to affecting personal living costs, the high interest rates on existing mortgage loans are also affecting the real estate market. in the industry's view, the current "price-for-volume" transaction pattern of second-hand houses in core cities is related to the selling behavior on the supply side, which is mainly attributed to the fact that homeowners want to reduce the monthly payment pressure caused by high-interest mortgage loans. given the lack of policy support to further reduce the interest rates on existing mortgage loans, homeowners tend to sell their properties to obtain working capital, and then repay the loan in advance to optimize their mortgage loan costs.

huafu securities pointed out that in the environment where the expectation of us interest rate cut in september is rising and the downward space of domestic interest rate is opening up, if the interest rate of existing loans is further reduced to the level of new housing loan interest rate,it is expected to accelerate the improvement of the selling pressure of second-hand houses and significantly improve the supply and demand relationship in the second-hand housing market, accelerating the stabilization of housing prices from old residential areas, gradually spreading to second-hand houses and new houses, and promoting stabilization of the real estate market.

guosheng securities also said that from the perspective of impact, the adjustment of existing mortgage interest rates will not help the short-term real estate market sales much, butit will ease the pressure of early loan repayment in the medium and long term, enhance residents' confidence, and have a positive impact on their housing purchase decisions.

however, from another perspective, such adjustments may have some negative effects on banks. not long ago, at the interim performance meeting of china merchants bank, wang liang, president of china merchants bank, mentioned that the bank has not yet received any notice or draft for comments on the transfer of mortgage loans. he bluntly stated that if measures such as the transfer of existing mortgage loans are implemented, it will have a certain negative impact on the existing mortgage interest rates of the banking industry.

"from the perspective of operational convenience, mortgage transfer will create a lot of new workload." yan yuejin said that such adjustments are generally bad for banks themselves, but good for consumers or households. in turn, the pressure of monthly payments can be converted into demand for daily consumption, and can also become an important driving force for a new round of consumption boost.

written by: sun yang, a reporter from nandu wancaishe