the rrr and interest rate cuts are implemented! industry: helps reduce home purchase costs and restore real estate market expectations
2024-09-27
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from the central bank's official announcement to lower the down payment ratio for second homes and existing mortgage interest rates, to the politburo's statement to promote the real estate market to "stop falling and stabilize" and adjust the housing purchase restriction policy, to the central bank's announcement to lower the deposit reserve ratio, the real estate market is experiencing good times again.
the implementation of the rrr cut will release about 1 trillion yuan of long-term liquidity
on september 27, the people's bank of china issued an announcement stating that the people's bank of china will adhere to a supportive monetary policy stance, increase the intensity of monetary policy control, improve the accuracy of monetary policy control, and create good currency for china's stable economic growth and high-quality development. financial environment. the people's bank of china has decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points starting from september 27, 2024 (excluding financial institutions that have implemented a 5% deposit reserve ratio). after this reduction, the weighted average deposit reserve ratio of financial institutions will be approximately 6.6%.
the rrr cut is one of the central bank's expansionary monetary policies. the central bank lowers the statutory deposit reserve ratio, which affects the amount of loanable funds for banks, thereby increasing the scale of credit, increasing the money supply, releasing liquidity, and stimulating economic growth.
chen wenjing, policy research director of the china index research institute, believes that due to the narrow net interest margin of banks in the early stage, the reduction of existing mortgage interest rates was constrained, and the central bank's rrr cut also opened up space for this.
at a press conference held by the state council information office on the morning of september 24, pan gongsheng, governor of the people's bank of china, said that "the central bank's rrr cut is equivalent to directly providing banks with low-cost, long-term capital operations. medium-term lending facilities and open market operations are the central bank is the main way to provide short- and medium-term funds to commercial banks, and the decline in interest rates will also reduce banks’ funding costs.”
pan gongsheng said that the deposit reserve ratio will be lowered by 0.5 percentage points to provide long-term liquidity of approximately 1 trillion yuan to the financial market. depending on the market liquidity situation, during the year, opportunities may be chosen to further lower the deposit reserve ratio by 0.25-0.5 percentage points. .
pan gongsheng pointed out, "the people's bank of china plans to guide banks to make batch adjustments to the interest rates of existing mortgages and reduce the interest rates of existing mortgages to close to the interest rates of new loans. we estimate that the average decrease will be around 0.5 percentage points. the reason why it is said to be average is because the loans are the interest rates of existing mortgage loans issued at different times, in different regions and by different banks are different. we predict that the rate of decline is an expected average. banks' reduction in existing mortgage interest rates will help further reduce borrowers' mortgage interest expenses. , we estimate that this policy will benefit 50 million households with a population of 150 million, and reduce the total interest expenses of households by about 150 billion yuan per year on average. this will help promote the expansion of consumption and investment, and will also help reduce early loan repayment behavior. , at the same time, it can also reduce the space for illegal replacement of existing mortgage loans, protect the legitimate rights and interests of financial consumers, and maintain the stable and healthy development of the real estate market.”
guide new and existing mortgage interest rates downward
on the same day, the central bank announced that in order to increase the counter-cyclical adjustment of monetary policy and support stable economic growth, starting from september 27, the open market 7-day reverse repurchase operation interest rate will be adjusted from the previous 1.70% to 1.50%.
the industry believes that under the market-oriented interest rate control mechanism, adjustments to policy interest rates will drive adjustments to various market benchmark interest rates. it is expected that lpr, deposit interest rates, etc. will also fall by 0.2-0.25 percentage points in october.
monitoring data from the china index research institute shows that since 2024, the central bank has twice lowered the lpr of more than 5 years by a total of 35bp to 3.85%. in addition to canceling the lower limit, other cities across the country have also abolished the lower limit on interest rates. the interest rate on newly issued first-home loans in many cities has dropped to around 3.2%, and in some cities the interest rate has dropped below 3%.
from the perspective of the real estate market, according to the latest statistical data from 58 anjuke, compared with the first half of september 2024, both new and second-hand housing markets across the country have shown a significant increase in house-hunting activity. specifically, the popularity of the new home market increased by 4.4%, while the popularity of the second-hand home market was even stronger, rising by 5.3%. this data strongly proves that the current policies have achieved significant results in stimulating demand for home purchases and effectively stimulated market vitality.
lu qilin, research director of 58 anjuke research institute, pointed out that the core purpose of the implementation of financial policies such as reserve requirement ratio and interest rate cuts is to expand market currency circulation and further enhance the liquidity of market participants by reducing the capital costs of real estate companies and home buyers. confidence and positivity. this move not only promotes the development and construction of real estate projects, but also stimulates consumers' willingness to purchase houses, lays a solid foundation for the stability and recovery of the real estate market, and helps the market achieve a good trend of bottoming out and rebounding under the current environment.
industry insiders believe that under the combined policy of lowering reserve requirements and interest rates, releasing more liquidity and reducing financing costs is expected to boost market confidence and promote the smooth operation of the macro economy.
the paper reporter ji simin
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