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the central bank proposed in its work conference in the second half of 2024 that it would "shift its focus more to benefiting people's livelihood and promoting consumption". since august 2024, the central bank has mentioned in public interviews that it would "promote a steady decline in corporate financing and resident credit costs" and "study reserve increment policy measures". the emergence of many policy signals has once again aroused the market's attention to the reduction of existing mortgage interest rates, and the whole society has once again expected a reduction in bank existing mortgage interest rates.

everyone clearly remembers that on august 31, 2023, the people's bank of china and the state financial regulatory commission jointly issued the "notice on reducing the interest rate of existing first home loans", which clearly stated that eligible existing first home borrowers can negotiate with the lending financial institutions to reduce the interest rate. in september, various banks lowered the interest rates of existing mortgage loans, and roughly carried out two operations: first, the interest rate level of newly issued loans is determined by independent negotiation between financial institutions and borrowers, lacking an accurate "top-down" reduction range; second, the margin of newly issued loans on the lpr shall not be lower than the policy lower limit of the first home loan interest rate in the city where the original loan was issued. for cities with higher interest rate margins when mortgages were issued, the room for reduction is even more limited.

in this case, many people may not know much about the society's expectation of a further reduction in the interest rates of bank's existing mortgage loans? in fact, the interest rates of bank's existing mortgage loans have not been reduced in one step before, and the 5-year lpr interest rate has been further reduced. the gap between the interest rates of bank's existing mortgage loans and the interest rates of newly issued mortgage loans is large. for example, according to the central bank's 2023q4 monetary policy implementation report, the weighted average interest rate generally implemented by banks' existing mortgage rates has dropped to 4.27% since september last year, but it is still about 82 basis points higher than the weighted average interest rate of 3.45% for new mortgages in 2024q2. the gap between the interest rates of existing mortgage loans a few years ago and the current interest rates is more than 20%. as a result, the interest rates of bank's existing mortgage loans still have a large room for reduction; if they are not reduced, it will be very unfair to existing mortgage holders, and it will also breed the unbalanced psychology of existing mortgage holders.