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since the beginning of this year, the demand for residential mortgage loans has continued to be sluggish, and commercial banks, loan intermediaries and other financial institutions have launched athe battle for mortgage loans.

on the market"balloon loan" with zero down payment and interest first and principal laterextraordinary credit policies such asmortgage rebate, loan interest rate cutillegal operations have reappeared in the market.

from these unconventional credit operation methods, whether it is zero down payment or interest first and principal later financial products, they all have one thing in common, that is,postponing loan repayment pressure, raising leverage ratio in disguise, thereby increasing the total cost of buying a house and the risk of default. however, "mortgage rebates" and "refinancing interest rate cuts" are both prohibited by regulatory orders and are also illegal.hidden risks。

leverage reduction products such as zero down payment are available to somethe sales of low-priced and just-needed products may have a certain boosting effect, but it is almost ineffective for high-priced projects, and the impact of unconventional credit operations on the real estate market itself is very limited.

since the "517 new policy", the lower limit of down payment ratio for commercial housing loans in various places has basically been adjusted to 15% for the first set and 25% for the second set. except for beijing and shanghai, the vast majority of cities in the country have adjusted to the national lower limit.

despite this, in order to further attract customers and lower the threshold for home buyers, many developers and intermediary agencies have launched“zero down payment” businesscommercial banks also launched“interest first, principal later” financial product.

how does “zero down payment” work?

the first is to make a high contract price, that is, the developer and the home buyer signyin-yang contract, apply for a loan from the bank at an appraisal price that is higher than the actual transaction price, and use the extra loan as the down payment.the second is that the developer or intermediary advances the funds first., the home buyer will repay it within the agreed period.the third type is down payment loanfinancial institutions assist home buyers in applying for a commercial loan under other names such as consumption and decoration to pay the down payment.

so what does “pay interest first, then principal” mean?

simply put, home buyers only need to repay the loan interest within a certain period of time, and do not have to repay the principal. after the interest repayment period, they can repay the loan in equal installments of principal and interest or equal installments of principal. the length of the interest repayment period varies depending on the product, and the longest can be up to thirty years.

in may this year, ping an bank launched"balloon loan"this is a typical "interest first, principal later" model. the borrower calculates the monthly payment based on 240 periods, repays the principal and interest in installments within the loan term, and repays the remaining principal in one lump sum in the last installment.

in addition, icbc also launched"stay and stay"you only need to pay interest before the new house is delivered, and repay the loan normally after moving in; china construction bank has launched"easy to provide"within 2 years, you can repay only 1 yuan of principal and interest each time, and the remaining principal and interest will be repaid in monthly installments after the end of the interest repayment period.

in addition to targeting incremental loan users, many commercial banks have also openedexisting mortgage loan "interest first, principal later" conversion channelindustrial bank has launched the "pay with salary" conversion service. in the initial 2-3 years of conversion, only the interest needs to be repaid, and after the expiration of the period, the repayment method will be restored to the previous one.

in fact, the common logic of "zero down payment" and "interest first, principal later" ispostponing the loan repayment pressure of homebuyers, to adapt to income expectations that are low at first and high at the end, but this kind of leverage behavior can easily lead to a household debt crisis.

from a cost perspective, "zero down payment" and "interest first, principal later" are not cost-effectiveaccording to estimates, for a loan of 1 million yuan with a term of 20 years, the repayment method of the "balloon loan" isthe interest paid is nearly 110,000 yuan more than the conventional equal principal and interest repayment, zero down payment advance payment, down payment financing and other methods may be accompanied by high handling fees, and a higher total price will face higher housing transaction taxes and fees, raising the overall cost of buying a house.

with the sluggish demand for residential mortgages, banks, loan intermediaries and other financial institutions are also constantlycoil products, coil prices, even at the cost of adoptingmortgage rebate, loan interest rate cutand other illegal operations to gain customers and seize market share.

the first is mortgage rebates.in the past, mortgage rebates were part of the commissions that banks returned to intermediaries who recommended homebuyers through various channels. now, in order to compete for incremental loan customers, mortgage rebates have gradually evolved into being directly issued to individual homebuyers.the rebate ratio is about 5‰ of the total loan amount, some can reach more than 1%, and the payment method is not limited to cash, but also gold, shopping cards and other equivalents. according to public reports,some foreign banks in shanghai can return up to 10,000 yuan in cash for a loan of 1 million yuan., dongguan can return 6‰ to 8‰ to the intermediary agency.

there is also a reduction in interest rates for refinancing.along withexisting mortgage loansas the interest rate spread of incremental loans continues to widen, the current interest rates on existing mortgages are generally still above 4%, while the interest rates on first-home mortgages in some areas have fallen below 3%. at the same time, the interest rates on business loans and consumer loan products have also fallen into the "2-digit" range.

many existing mortgage customers have begun to seek "refinancing and interest rate cuts", by misappropriating low-interest loans such as business loans and consumer loans to replace high-interest mortgages, in order to reduce loan interest expenses. the usual operating process is that with the help of bridge funds provided by loan intermediaries, home buyers pay off existing housing loans and complete the release of housing mortgages, and then mortgage the property to the bank in the name of individual industrial and commercial households or shell companies, and apply for operating loans.

both of the above situations are behaviors that are expressly prohibited by regulators.according to statistics, in the first half of this year, the regulatory authorities have issued a number of reports on the illegal flow of credit funds into the real estate sector.a total of 48 fines were issued to commercial banksin august, industry associations in shanghai, jiangsu, shandong and other places issued urgent documents to stop mortgage rebates and urged commercial banks to complete the rectification of existing businesses as soon as possible.

for home buyers,illegal operations are not protected by lawthere are risk factors such as high hidden handling fees and inability to renew loan contracts in "refinancing by transferring loans", and mortgage rebates are generally not guaranteed by written contracts, which can easily lead to disputes afterwards. home buyers should avoid "losing the big for the small".

what is the effect of unconventional credit operations?

leverage reduction products such as zero down payment may have a certain boosting effect on the sales of some low-priced, urgently needed products, but they are almost ineffective for high-priced projects.

let's first look at the sales of just-needed products, such as nanning jianfa wuxiang heyue, which has a down payment of 20,000 yuan and combines it with discounts such as ready-to-move-in houses and special price listings.16 units sold in augustanother example is jinmao yue, sino-european international city, chengyang district, qingdao, which has a down payment of 5% and a fixed price of 750,000 89 square meters, and high commission points to attract customers.in august, 38 units were subscribed, while the average subscription volume for a single project in qingdao during the same period was only 5 units.in addition, many real estate projects in dongguan, foshan and other places have introduced policies such as down payment installments and taking possession of the property first and then making down payments to attract customers.

let's look at the sales of high-priced products. in august, wanfeng coast city hanfu in bao'an district, shenzhen, launched a one-year interest-free down payment loan activity with a maximum of 600,000 yuan.however, the average weekly visitor volume was 99 groups, a decrease of 48% from the previous month.the average weekly subscription was 6 units, a 77% decrease from the previous month.

the impact of businesses such as mortgage rebates and interest rate cuts on loan transfers is more reflected in the financial system rather than the real estate market.current homebuyers will not buy a house just because they can get a rebate on their mortgage loans. with the expectation of falling house prices, few people will take advantage of the loan replacement loophole to free up their mortgage qualifications and buy another house. therefore, this type of unconventional credit operation has a very limited impact on the real estate market itself.

as residents' loan demand continues to be sluggish and reserve requirement ratio and interest rate cuts have been delayed, financial institutions have been forced to launch a series of new mortgage products under pressure to lend. however, the market response has been relatively lukewarm. zero down payment, combined with marketing strategies such as price cuts, is only effective for some low-priced projects and is almost ineffective for high-priced projects that account for a larger market share.

in addition, products such as “balloon loans” sparked heated public debate and were taken off the shelves after receiving regulatory risk warnings. mortgage rebates and interest rate cuts on loan transfers failed to boost home buying sentiment, but instead disrupted the order of the financial market.

it is worth mentioning that unconventional credit operations are usually accompanied by legal risks. once violations are investigated and dealt with by regulatory authorities, there may be a risk of banks withdrawing loans or cutting off loans, and home buyers need to bear the consequences themselves. operations such as zero down payment and loan transfers also come with hidden fees such as advance payment and bridge fees, which actually increase the total cost of buying a house. "balloon loans" and other measures will postpone the repayment pressure, and the total interest expenditure will continue to increase. it is easy for home buyers to overestimate their future repayment ability and borrow blindly.

for banks and the financial system, many of the customers attracted through illegal operations have unstable incomes or substandard credit, and have a relatively high risk of loan defaults, which may lead to a further increase in the non-performing rate of individual loans, posing a risk to the entire financial system.