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cailianshe news, september 24 (reporter li jie)after about four months, a new round of policies to stabilize the housing market has arrived, which is expected to inject a shot in the arm to the real estate market in the short term.

on september 24, the state council information office held a press conference on "financial support for high-quality economic development", announcing a number of policies that are beneficial to the real estate industry, including lowering the reserve requirement ratio, lowering interest rates, reducing interest rates on existing mortgages, reducing the down payment ratio for second homes, and other major measures. it also introduced the progress of the re-lending of affordable housing and the "white list" work.

analysts pointed out that this package of policy support from the regulatory authorities is strong, targeted, and wide-ranging, covering both the demand and supply sides. it is a new round of policies to stabilize the real estate market that the regulatory authorities have launched following the 517 policy.

"the next focus is how to implement further reductions in the interest rates of newly issued residential mortgage loans, which is the key to reversing expectations for the property market." wang qing, an analyst at orient securities, believes that after the central bank announced a 20 basis point cut in the policy interest rate, the interest rates of newly issued residential mortgage loans will follow suit. further reductions in mortgage interest rates and targeted interest rate cuts for the real estate industry will be the main focus of future property market support policies.

zhang dawei, chief analyst of centaline property, also believes that the market expects that interest rates may be lowered again in the future, and mortgage rates are expected to drop to less than 3%; and tax exemption policies such as house purchase stamp duty and value-added tax may be introduced to continuously reduce transaction costs for home buyers.

there is still much room for lowering interest rates on new residential mortgage loans in the future

at the press conference, pan gongsheng, governor of the people's bank of china, announced that the reserve requirement ratio and interest rates would be lowered, and the single reduction was historically large. he also revealed in advance that the reserve requirement ratio would be lowered again within the year, expressing a clear supportive stance.

in terms of reserve requirement ratio cuts, the central bank announced at a press conference that it would lower the deposit reserve ratio by 0.5 percentage points and provide 1 trillion yuan of long-term liquidity. this is a necessary measure to hedge the pressure on government bond supply. it also revealed that the reserve requirement ratio would be lowered by another 0.25%-0.5% this year, and its attitude and stance on liquidity support were firm.

pan gongsheng also said, "there are still three months before the end of the year, and we may further reduce the reserve requirement ratio by 0.25-0.5 percentage points depending on the situation." this means that after this reserve requirement ratio cut, there is still a certain expectation of a reserve requirement ratio cut in the fourth quarter.

at the same time, it was announced at the press conference that the 7-day reverse repurchase operation rate will be reduced by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding the loan market benchmark rate and deposit rate to decline simultaneously.

chen wenjing, director of market research at china index academy, said that it is expected that lpr and deposit rates will also decline by 0.2-0.25 percentage points in october.

wang qing believes that the reason behind the planned reserve requirement ratio and interest rate cuts is that since the second quarter, the economy has been stable but weak, with prices remaining low and the demand for countercyclical adjustments increasing due to the continued adjustment of the property market, insufficient domestic effective demand, and the pain of the transformation from old to new growth drivers.

he further stated that the meeting of the political bureau of the central committee on july 30 proposed that "macroeconomic policies should continue to be implemented with greater force" and "a variety of monetary policy tools should be used in a comprehensive manner to increase financial support for the real economy and promote a steady decline in the overall financing costs of society." the central bank's announcement of interest rate and reserve requirement cuts is a concrete implementation of the above arrangements.

the reduction in existing mortgage interest rates reduced household interest expenses by 150 billion

the much-watched interest rates on existing mortgage loans will also be significantly reduced.

at the meeting, the central bank announced that it would guide commercial banks to lower the interest rates on existing mortgage loans to around the interest rates on newly issued mortgages, with the average reduction expected to be around 0.5 percentage points.

"lowering the interest rate on existing mortgages by an average of 0.5 percentage points and gradually aligning it with the interest rate on new mortgages is aimed at boosting consumption and reducing risks. governor pan revealed at a press conference that lowering the interest rate on existing mortgages can reduce household interest expenses by about 150 billion yuan on average each year. if calculated based on a marginal propensity to consume of 70%, it can bring about an increase of about 100 billion yuan in consumption," said huang runan, an analyst at guotai junan.

analysts believe that, more importantly, governor pan clearly pointed out that this move can slow down the situation of residents repaying loans in advance and illegally replacing mortgages with consumer loans, and protect the legitimate rights and interests of financial consumers.

"this will effectively curb the trend of early loan repayments and alleviate its impact on residents' consumption. at the same time, it also sends a positive signal of stabilizing the property market and help promote the stabilization and recovery of the real estate market," said wang qing.

a research report by orient securities pointed out that as of the end of june this year, the scale of existing housing loans was 37.8 trillion yuan, and the interest rate was reduced by 0.5 percentage points, which means that banks' interest income in one year may be reduced by 189 billion yuan, which is approximately equivalent to about 8.2% of the total profit of the banking industry in 2023.

"the interest rates for the first and second mortgage loans are expected to be adjusted accordingly. on the one hand, this will reduce the cost of home purchase for residents, help promote residents' consumption, and provide important support for the smooth operation of the economy. on the other hand, it will also help repair market expectations and ease the wait-and-see sentiment caused by the expectation of a decline in mortgage interest rates. together with this interest rate cut, it will further reduce the cost of home purchase for buyers and drive the release of housing demand." chen wenjing believes.

down payment ratio for second homes drops to historic low

in addition to lowering the interest rates on existing mortgages, the down payment ratio for second homes has also dropped to a historical low.

the central bank announced that it will unify the minimum down payment ratio for first and second home mortgages, and reduce the national minimum down payment ratio for second home mortgages from 25% to 15%.

"overall, the reduction of the minimum down payment ratio for second home loans to 15% is an unprecedented policy force. coupled with the continuous optimization of policies at the local level after the third plenary session of the 18th cpc central committee, it is further actively promoted and implemented. i believe these measures will accelerate the bottoming out and recovery of the fundamentals of the real estate industry." dongguan securities analyst he minyi believes.

previously on may 17, the people's bank of china and the state administration of financial supervision jointly issued a document to lower the minimum down payment ratio for the first and second commercial loans to 15% and 25%, respectively. after that, various regions quickly followed suit and implemented it; as of now, only beijing, shanghai and shenzhen have not yet lowered the down payment ratio for the first and second commercial loans to the national lower limit.

analysts at china index academy believe that after this policy, all regions are expected to accelerate follow-up implementation and reduce the lower limit of the down payment ratio for the second home to 15%. beijing, shanghai and shenzhen are also expected to follow up with adjustments; the reduction in the down payment ratio will further lower the threshold for home purchases and is expected to drive the release of improvement demand.

chen wenjing said that in core cities with high housing prices such as beijing, shanghai and shenzhen, most buyers who buy a second home usually use the "sell one and buy one" method to complete the replacement, and need to complete the existing housing transaction and then obtain the replacement funds. the previously high down payment ratio for the second home has imposed certain restrictions on the purchase of new homes. the reduction of the down payment ratio for the second home will help alleviate the problem of having to buy first and then sell before changing homes, and accelerate the circulation of the chain of replacement of first-hand and second-hand homes.

local state-owned enterprises will receive more financial support for stockpiling and destocking

on the demand side, the central bank also announced that "the proportion of central bank funds supporting the 300 billion yuan affordable housing re-loan created by the people's bank of china in may will be increased from 60% to 100%, enhancing market-oriented incentives for banks and acquisition entities."

"this will significantly speed up the pace of local governments acquiring existing commercial housing for use as affordable housing and ease inventory pressure in the commercial housing market," said wang qing.

"increasing the support ratio from the previous 60% to 100% will help ease the downward pressure on housing prices during the purchase and storage process." huang runan said that the interest rate of the 300 billion yuan affordable housing re-loan is 1.75%. when the support ratio is 60%, it is equivalent to the average loan cost of commercial banks between 2% and 2.5%. the purchase and storage house prices need to make the rental return rate above 2.5% to break even; and increasing it to 100% can reduce the loan cost of commercial banks to 1.75%, and only a rental return rate of more than 2% is required to break even. this will help ease the downward pressure on housing prices during the purchase and storage process.

"the central bank's expansion of the proportion of central bank funds supporting re-loans for affordable housing will help increase the scale of commercial bank loans and will have a certain positive effect on local government storage," said chen wenjing.

it further pointed out that it is important to note that at present, state-owned enterprises in various regions are still facing restrictions such as difficulty in price matching and mismatch between supply and demand in stockpiling. these restrictive factors will still exist in the short term. if the pace of stockpiling by state-owned enterprises is to be accelerated, it may be necessary to further optimize policies, such as expanding the scope of use of the acquisition of existing stocks and expanding the acquisition targets.

increase financial support for real estate companies

in addition to the above measures, the press conference also announced that it will study and introduce incremental policies to revitalize existing land, extend the "16 financial articles" and the document deadline for commercial property loans.

"through the above measures, we will further increase financial support for real estate companies, which will also play an important role in stabilizing corporate expectations and boosting market confidence." said a real estate industry analyst.

specifically, this time the central bank proposed to "support the acquisition of existing land by real estate companies. on the basis of using part of local government special bonds for land reserves, study allowing policy banks and commercial banks to lend to support qualified companies in the market-oriented acquisition of land by real estate companies, revitalize existing land, and alleviate the financial pressure on real estate companies. when necessary, the people's bank of china can also provide re-lending support. we are still studying this policy with the state administration of financial supervision."

"the central bank has further clarified that it will study the financial support policy for qualified enterprises to acquire land from real estate companies through market-oriented means, and provide re-lending support when necessary. this means that more supporting funds will enter the market in the future. on the one hand, for high-quality real estate companies, they can actively seek loan support, find high-quality land from real estate companies with financial difficulties to acquire, expand land reserves, and revitalize existing land. on the other hand, the sale of existing land by real estate companies with financial difficulties will also help ease financial pressure and further stabilize market expectations." said the above-mentioned china index academy analyst.

in addition, the central bank also announced that the two policy documents, commercial property loans and "16 financial policies" that were due before the end of the year, would be extended to the end of 2026. analysts said that the two documents were originally due to expire at the end of this year, and the central bank and the financial supervision administration jointly extended the two documents to the end of 2026.

in wang qing's view, this means that the policy of supporting real estate financing will be extended for one year, with the "three arrows" as the focus. it is expected that all regions will focus on implementing the urban real estate financing coordination mechanism in the next step, and the credit financing of real estate companies will continue to improve after turning positive year-on-year in august.

analysts believe that overall, the new round of policies launched by the regulatory authorities to stabilize the property market has injected strong momentum into the real estate market. from lowering the reserve requirement ratio and interest rates to lowering the interest rates of existing mortgage loans, from reducing the down payment ratio for second homes to increasing financial support for local state-owned enterprises to destock, and then to increasing financial support for real estate companies, a series of measures comprehensively cover both the demand and supply sides of the real estate market. these measures undoubtedly demonstrate the regulatory authorities' firm determination to stabilize growth and the property market, and also bring new opportunities and challenges to the future development of the real estate industry.

so, driven by these policies, can the real estate market accelerate its bottoming out and stabilize? it remains to be seen.