financial focus丨new real estate finance policies are here, what will be the impact of the policy combination?
2024-09-25
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xinhua news agency, beijing, september 25 title: new real estate finance policies are here, what will be the impact of this policy combination?
xinhua news agency reporters wu yu, guo yujing and li xiaoting
a new round of financial measures to support real estate has been released recently: guiding banks to lower the interest rates of existing mortgage loans, unifying the minimum down payment ratio of mortgage loans to 15%, optimizing the policy of refinancing for affordable housing, and supporting the acquisition of existing land of real estate companies... what are the considerations for launching a combination of real estate financial policies at this time? what impact will the new policies bring?
on the 24th, at a press conference held by the state council information office, pan gongsheng, governor of the people's bank of china, announced five real estate financial policies at once. this made many market participants exclaim: beyond expectations!
the picture shows the press conference held by the state council information office in beijing on september 24. photo by xinhua news agency reporter li xin
to improve the real estate financial policy, we must start from both the supply and demand sides. in terms of stimulating effective demand, the people's bank of china once again announced a reduction in the interest rate of existing mortgage loans and unified the minimum down payment ratio for the first and second mortgage loans.
in august last year, the people's bank of china also pushed commercial banks to reduce the interest rates of existing mortgage loans. after the adjustment, the interest rates of existing first-home mortgage loans dropped by an average of 0.73 percentage points. however, after the last reduction, the interest rates of many existing mortgage loans are still around 4%.
as the interest rates on newly issued loans continue to decline, the interest rate gap between new and old mortgages continues to widen, especially in cities where the original markup was higher, such as beijing, shanghai, shenzhen, guangzhou, etc., where the interest rate gap between new and old mortgages is even greater.
regarding this round of batch adjustments, pan gongsheng said that it is planned to guide banks to lower the interest rates on existing mortgage loans to around the interest rates on newly issued mortgages, with an average drop of around 0.5 percentage points expected.
mr. sun, who lives in beijing wangjing, was quite concerned when he learned that the interest rate of existing mortgage loans would be adjusted again. in the last round of adjustment of existing mortgage loans, his loan interest rate was reduced to 4.75% due to the lower limit of beijing's first mortgage interest rate policy.
"the current lower limit of the interest rate for newly issued first-home mortgages in beijing is 3.4%, which is more than 1 percentage point away from my mortgage rate. even if it only drops by 0.5 percentage points, i can pay about 1,600 yuan less per month." mr. sun did some calculations.
zhang dawei, chief analyst of centaline property, said that if a commercial loan of 1 million yuan is calculated based on equal principal and interest for 30 years, the mortgage interest rate will drop by 0.5 percentage points, the borrower's monthly payment will be reduced by about 280 yuan, and the interest expenditure can be reduced by more than 100,000 yuan in 30 years.
as of the end of june, the balance of personal housing loans in my country was 37.79 trillion yuan. pan gongsheng made it clear that the reduction in the interest rate of existing mortgage loans will benefit 50 million households and 150 million people, and reduce the total interest expenditure of households by about 150 billion yuan per year on average.
dong ximiao, chief researcher at china unionpay, said that lowering the interest rates on existing mortgage loans will help further reduce borrowers' mortgage interest expenses, reduce early loan repayments, and reduce the space for illegal replacement of existing mortgages, thereby maintaining the stable and healthy development of the real estate market.
in addition to reducing the interest pressure on mortgage borrowers, the financial management department also unified the minimum down payment ratio for first and second mortgages. the down payment ratio for second mortgages was also reduced to 15%, a record low in recent years.
mr. yuan, a resident of chongqing liangjiang new district, recently took a fancy to an improved house in the central park area. "my second child is about to be born, and the original house is not big enough, so i want to buy another four-bedroom apartment." mr. yuan told reporters that if the minimum down payment ratio for the subsequent second home loan is reduced from 25% to 15%, the down payment can save at least 235,000 yuan.
"adjusting housing finance policies from the two aspects of mortgage interest rates and down payment ratios will help lower the threshold for residents' housing consumption, reduce interest burdens, and promote the expansion of consumption and investment." zeng gang, director of the shanghai finance and development laboratory, said that local governments can also formulate policies based on their cities and determine the minimum down payment ratio within their jurisdiction. in addition, 15% is only the minimum down payment ratio. whether the minimum down payment ratio can be implemented depends on the risk of the customer.
a real estate project site photographed in jiading district, shanghai in may 2024. photo by xinhua news agency reporter zheng juntian
while supporting residents' home purchases from the demand side, financial management departments have also introduced a number of policy measures that are beneficial to the supply side.
pan gongsheng introduced that phased policies such as the extension of real estate companies' existing financing and commercial property loans were originally scheduled to expire at the end of this year. this time, the people's bank of china and the state administration of financial supervision decided to extend these two policies to the end of 2026.
according to industry experts, extending the term of some real estate financial policies will help further mobilize real estate companies' existing assets and improve their cash flow.
activating existing housing stock is the key to defusing real estate risks. the people's bank of china has also further optimized the policy on refinancing of affordable housing, which has attracted widespread attention in the market.
in may this year, the people's bank of china announced the establishment of 300 billion yuan of affordable housing re-loans, guiding financial institutions to support local state-owned enterprises in purchasing completed but unsold commercial housing at reasonable prices in accordance with market-oriented and rule-of-law principles.
"in order to further enhance market-oriented incentives for banks and acquisition entities, we will increase the proportion of the people's bank of china's funding support in the affordable housing re-lending policy from the original 60% to 100%, and accelerate the process of destocking commercial housing," said pan gongsheng.
dong ximiao believes that increasing the proportion of financial support from the people's bank of china to 100% will help increase the enthusiasm of commercial banks and local state-owned enterprises and accelerate the process of destocking commercial housing. this move will also help further increase the supply of affordable housing and promote the establishment of a new model for the transformation and development of the real estate industry.
in addition, in terms of supporting the acquisition of real estate companies' existing land, the people's bank of china proposed that, on the basis of using part of local government special bonds for land reserves, it would study allowing policy banks and commercial banks to lend to support qualified companies in the market-based acquisition of real estate companies' land.
pan gongsheng introduced that this move will help revitalize existing land use and ease the financial pressure on real estate companies. "when necessary, the people's bank of china can also provide re-lending support."
as the supply and demand relationship in china's real estate market has undergone major changes, financial measures have been constantly adjusted and optimized to adapt to the situation. on the one hand, they continue to increase support for rigid and improved housing demand, and on the other hand, they prevent the spillover of real estate risks.
"this round of real estate financial policies has been further strengthened, without changing the consistent policy orientation. the connection between the old and new policies has been steady and orderly." wen bin, chief economist of china minsheng bank, said that the intensity of financial policy support has been increased, comprehensively helping to stabilize the existing volume and promote incremental volume, sending a clear signal of stabilizing the real estate market.
