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the topic of lowering interest rates on existing mortgage loans for 150 million users has aroused great concern in the market. on september 24, at a press conference held by the state council information office in the morning, pan gongsheng, governor of the people's bank of china, announced that the interest rate on existing mortgage loans would be lowered to around the interest rate on new mortgage loans. the average reduction is expected to be around 0.5 percentage points. at the same time, the minimum down payment ratio for mortgage loans for first and second homes was unified, and the minimum down payment ratio for second home loans at the national level was lowered from 25% to 15%.

if a loan of 1 million yuan is used for 30 years, a decrease of 0.5 percentage points, or 50 basis points, means that the monthly payment of each existing home loan buyer will be reduced by approximately 280 yuan, which can reduce interest expenses by 100,000 yuan in 30 years.

1 million can reduce interest by 100,000 yuan in 30 years

as soon as the two major mortgage policies were announced, the entire market went into a frenzy. what has attracted national attention is that the existing mortgage interest rate has been lowered again, which will save a lot of money for the majority of home buyers.

according to the statement, lowering the existing mortgage interest rate to close to the new mortgage interest rate means that in the near future, banks will continue to reduce the cost of mortgage loans for existing home buyers in accordance with the deployment of the people's bank of china.

first of all, how to understand the meaning of an average decrease of about 0.5 percentage points? according to statistics from the centaline real estate research institute, the current average interest rate of existing mortgage loans is about 3.92%, while the average interest rate of new mortgage loans is about 3.3%, which means that the average interest rate of existing mortgage loans and new mortgage loans is more than 60 basis points.

if it is reduced by another 50 basis points, it means that basically the average interest rate difference between existing mortgage loans and new mortgage loans is only 10-15 basis points, which will be a huge benefit to home buyers.

how much can an individual save after the interest rate cut? zhang dawei, chief analyst of centaline real estate, pointed out that if a 1 million yuan loan is used for 30 years, a 50 basis point reduction means that each existing mortgage buyer will reduce the monthly payment by approximately 280 yuan, which can reduce interest expenses by 100,000 yuan in 30 years. yuan.

at the meeting, pan gongsheng mentioned that the bank's reduction in existing mortgage interest rates will help further reduce borrowers' mortgage interest payments. it is expected that this policy will benefit 50 million households with a population of 150 million, and reduce the total interest payments of households by about 150 billion per year on average. this will help promote the expansion of consumption and investment, and also help reduce early loan repayments. 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.

ma hong, a senior researcher at the guangkai chief industry research institute, also said that the most direct positive effect of lowering existing mortgage interest rates is to reduce the debt repayment pressure of existing mortgage holders, reduce the demand for early repayment, and may promote the increase of these residents. investment or consumer spending in other areas.

"reducing interest rates on existing mortgage loans has been the most popular topic in various places this year. this reduction in interest rates on existing mortgage loans will truly reduce the monthly payment burden for every household that has purchased a home." yan yuejin, deputy director of shanghai yiju real estate research institute, further said , coupled with the reductions in lpr and existing mortgage interest rates in recent years, it has actually significantly reduced the monthly payment burden and pressure. if we take into account that the lpr of more than five years has been reduced by 95 basis points since 2020, and then add this 50 basis points, then the interest rate of existing mortgage loans in the past four years can actually be reduced by about 145 basis points, which is a very rare reduction in existing mortgage loans in history. policy.

based on this calculation, taking into account the housing loan policies of the past four years, the cumulative monthly payment of a mortgage loan with a loan principal of 1 million yuan and equal principal and interest for 30 years has been reduced by 870 yuan. in other words, for a family with a loan of 1 million yuan, the monthly payment can be reduced by about 870 yuan, which is a real good policy.

"on the demand side, on the basis of the reduction of lpr, the reduction of the existing mortgage interest rate plus the benchmark interest rate will significantly improve the debt cost of home buyers and reduce the pressure of early repayment." ming ming, chief economist of citic securities, also said.

down payment reduction focuses on first-tier cities in beijing, shanghai and shenzhen

in addition, as for the down payment ratio, this time the guidance of loose down payment ratio has also been implemented for second homes or improved houses.

specifically, although the down payment ratio for second homes has been reduced in the past, it is still slightly higher than that for first homes. however, this reduction to 15% is believed by the industry to be helpful in lowering the down payment ratio and home purchase threshold for second homes or improved homes.

yan yuejin said that by simple calculation, if a family subscribes for a second home with a total price of 2 million yuan, the down payment used to be 500,000 yuan, but now it has been reduced to 300,000 yuan, a direct reduction of 200,000 yuan, which will naturally activate the improvement or replacement. housing demand.

"this default is consistent with the standard for first-time housing. in fact, it is a greater effort to reduce the demand for improved housing and enhance the ability to purchase houses." yan yuejin said that the people's bank of china's policy covers existing housing loans and new home purchase demand, with wide coverage and great benefits. , which has played a positive role in reducing the cost of home purchase and continuously enhancing the confidence in home purchase.

"the new deal provides more preferential policies for home purchases. it is hoped that by lowering the threshold for home purchase, the cost of home purchase will be reduced, and the demand for rigid and improved housing can be better met." regarding this policy statement, ma hong also pointed out that the people's bank of china is aiming at housing stock. adjustments to loan interest rates and down payment ratios for second homes release positive signals for stabilizing the property market in the form of policy "combination punches".

as of the end of august 2024, the cumulative sales area of ​​commercial housing nationwide has dropped by 18% year-on-year, the cumulative real estate investment has dropped by 10.2% year-on-year, and the stock-to-sales ratio of commercial housing to residential buildings is 6:1. the growth rate of real estate sales and investment continues to decline, and the inventory of commercial housing is at a relatively high level in history, indicating that the downward pressure on the real estate market is greater and has also caused a significant drag on the macro economy.

ma hong believes that the new policy will help de-escalate commercial housing across the country and is expected to accelerate the movement of the domestic commercial housing market toward a balance between supply and demand and promote the stable and healthy development of the real estate market.

however, zhang dawei pointed out that from the current market point of view, this policy mainly affects first-tier cities, because from a national perspective, the dividing line between first and second homes in most cities has become increasingly diluted, and only in first-tier cities the down payment for second homes is still obvious. exceeding the number of first-tier homes, it is expected that this will have a certain positive impact on first-tier cities such as beijing, shanghai, and shenzhen.

pan gongsheng also explained two points about unifying the minimum down payment ratio for housing loans to 15%. each locality can implement policies according to the city, independently determine whether to adopt differentiated arrangements, and determine the lower limit of the minimum down payment ratio within its jurisdiction. real estate market conditions vary greatly between cities and regions. local governments can adopt differentiated arrangements and determine the minimum down payment ratio within their jurisdiction based on the national bottom line.

in addition, commercial banks can negotiate with customers to determine the specific down payment ratio based on the customer's risk profile and willingness. “because 15% is only a minimum down payment ratio, commercial banks may set it higher than this level based on their risk assessment of customers. some customers say that if they have money, they can pay 30% down payment ratio. this is the difference between commercial banks and individuals. a kind of market-based consultation between the two countries,” pan gongsheng said.

it is worth noting that in order to help banks stabilize their net interest margins, pan gongsheng also stated that "at the same time, we will guide the loan market quoted interest rates and deposit interest rates to fall simultaneously to maintain the stability of the net interest margins of commercial banks."

beijing business daily reporter liu sihong