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the policy of batch reduction of existing mortgage interest rates was implemented as scheduled.

on the evening of september 29, the people's bank of china announced that it would improve the interest rate pricing mechanism for commercial banks' personal housing loans. on the same day, the market interest rate pricing self-discipline mechanism's "initiative on batch adjustment of existing mortgage interest rates" clarified that during the batch adjustment stage, commercial banks will reduce the point increase rate for existing home loans that is higher than -30bp on lpr (loan market quoted interest rate) to no lower than at -30 bp, and not lower than the lower limit of the new commercial personal housing loan interest rate currently implemented in the city where you are located.

in other words, after this round of batch adjustment of existing mortgage loans, the interest rates of existing mortgage loans for home buyers will be reduced to no less than lpr-30bp (except for second-home loans in beijing, shanghai, and shenzhen).

however, ordinary people are still somewhat confused about the details of how much benefit they can enjoy and how their existing mortgage loans should be adjusted. which mortgages can be adjusted? what is the adjustment range? china business news reporters have sorted out several hot topics as follows:

1. after batch adjustment, to what level can my mortgage interest rate be reduced?

2. what is the difference between the repricing date of the mortgage loan and whether it is january 1 of each year or the contract issuance date?

3. how will the fixed interest rate be adjusted this time?

4. my city has still set a lower limit for the new mortgage interest rate policy. how will my mortgage be adjusted?

5. can i enjoy this policy bonus on my second home loan?

an authoritative market expert told china business news that due to different repricing dates, the interest rates of different borrowers will differ after batch adjustments. the decrease in the interest rate after batch adjustment is mainly caused by the drop in point addition range to -30bp. after repricing, the decrease in lpr in the latest pricing cycle will also be reflected, and the interest rates of borrowers participating in this batch adjustment will be adjusted to the same level.

1. the repricing date of my mortgage contract is january 1st every year. how can the interest rate be reduced?

after the lower limit of the national mortgage interest rate policy was lifted on may 17 this year, the interest rates of new mortgage loans dropped significantly, further reducing the interest expenses of residents on home purchases. at the same time, the spread between new and old mortgages has widened again. in this regard, the interest rate self-discipline mechanism proposes that commercial banks adjust the interest rates of existing mortgage loans in batches to close to the interest rates of new mortgage loans in october (it is expected that the interest rates of existing mortgage loans will decrease by about 0.5 percentage points on average).

taking an existing mortgage with a term of 1 million yuan, 25 years, and equal principal and interest repayments as an example, assuming that the mortgage interest rate is reduced from 4.4% to 3.55%, the borrower's interest expense can be saved by approximately 5,600 yuan per year.

however, on this basis, due to the different circumstances of different home buyers, the corresponding reduction details are different.

assume that batch adjustments will be made on october 31, 2024, and it is also assumed that the lpr of more than 5 years reported on october 21, 2024 will follow the central bank's policy interest rate and decrease by 0.2 percentage points, from the current 3.85% to 3.65%, and will remain unchanged thereafter.

because the lpr of more than 5 years fell by 0.25 percentage points and 0.1 percentage points respectively in february and july 2024.

therefore, for the repricing date of january 1 each year, the adjusted interest rate is 3.9% (the then lpr is 4.2%-0.3%). after the lpr repricing on january 1 next year, the interest rate is 3.35% (the then lpr is 4.2%-0.3%). lpr3.65%-0.3%).

2. the repricing date of my mortgage contract corresponds to the contract issuance date. how can the interest rate be reduced?

if the repricing date of the borrower's mortgage contract is the day corresponding to the contract issuance date each year (for example, the contract issuance date is october 21, 2020, and the contract repricing date is october 21 each year), there are several situations: :

it is still assumed that batch adjustments will be made on october 31, 2024, and it is also assumed that the lpr of more than 5 years reported on october 21, 2024 will follow the central bank's policy interest rate and decrease by 0.2 percentage points, from the current 3.85% to 3.65%, and will remain unchanged thereafter. .

first, if the repricing date is from october 21 to october 31, the adjusted interest rate is 3.35% (the lpr at that time was 3.65%-0.3%).

second, if the repricing date is from november 1 to december 31, and from january 2 to february 19, the adjusted interest rate is 3.9% (the lpr at that time is 4.2%-0.3%), and the repricing date is the subsequent interest rate was 3.35% (the lpr at that time was 3.65%-0.3%);

that is to say, if the borrower’s mortgage contract repricing date is november 5 (during the period from november 1 to december 31 and january 2 to february 19), after the batch adjustment on october 31 , my mortgage interest rate will first be reduced to 3.9%, and on november 5, my mortgage interest rate will be further reduced to 3.35%.

third, if the repricing date is from february 20 to july 21, the adjusted interest rate is 3.65% (the then lpr3.95%-0.3%), and the post-repricing interest rate is 3.35% (the then lpr3.65 %-0.3%).

in other words, if the borrower’s mortgage contract repricing date is may 5th (between february 20th and july 21st), after the batch adjustment on october 31st, my mortgage interest rate will first be lowered to 3.65%. by may 5 next year, my mortgage interest rate will be further reduced to 3.35%.

fourth, if the repricing date is from july 22 to october 20, the adjusted interest rate is 3.55% (the then lpr3.85%-0.3%), and the post-repricing interest rate is 3.35% (the then lpr3.65 %-0.3%).

in other words, if the repricing date of the borrower's mortgage contract is august 1 (between july 22 and october 20), after the batch adjustment on october 31, the borrower's mortgage interest rate will be lowered first. to 3.55%. by august 1 next year, the mortgage interest rate will be further reduced to 3.35%.

3. how will the fixed interest rate be adjusted this time?

for existing fixed-rate mortgages, convert the latest lpr into points, and then adjust the point margin to -30bp.

for example, for an existing fixed-rate mortgage with an interest rate of 4%, and the latest lpr of more than 5 years is 3.85%, first convert the fixed interest rate to 4% = lpr + 15bp, and then adjust 15bp to -30bp.

case: the borrower's mortgage interest rate is currently a fixed interest rate of 4%. after this batch adjustment, the mortgage interest rate is adjusted to lpr-30bp. assume that the lpr of more than 5 years reported on october 21, 2024 follows the central bank's policy interest rate and decreases by 0.2 percentage points. it will be reduced from the current 3.85% to 3.65% and will remain unchanged in the future. then the borrower's mortgage interest rate will be reduced from 4% to 3.65%-30bp this time, to 3.35%, and will follow the lpr changes.

4. can i enjoy this policy bonus on my second home loan?

in order to adapt to the new changes in the supply and demand relationship in the real estate market, both in the batch adjustment and regular adjustment stages,no longer distinguishing between first and second homes(except for cities that have a lower limit on mortgage interest rates and differentiate between first- and second-home mortgages), guide the interest rates on existing first- and second-home mortgages to be lowered to around the national average of new mortgage interest rates, so as to reduce the interest burden on existing mortgage borrowers.

5. my city has still set a lower limit for the new mortgage interest rate policy. how will my mortgage be adjusted?

for some cities that still set a lower limit for new housing loan interest rate policies, the adjusted point increase rate must not be lower than the lower limit.

taking beijing as an example, from october 8, 2019 to december 14, 2023, the lower limit of the execution interest rate for second home loans in beijing is lpr + 105 basis points. currently, the lower limit of interest rate policy for second-home loans in beijing is -5bp for second-home loans within the fifth ring road, and -25bp for second-home loans outside the fifth ring road. when the corresponding second home loans are adjusted in batches, the bonus points are adjusted to -5bp and -25bp respectively.

case: the borrower purchased a second home in beijing between october 8, 2019 and december 14, 2023. outside the fifth ring road, the mortgage interest rate is currently 4.9% (lpr3.85%+105bp).

it is assumed that batch adjustments will be made on october 31, 2024, and it is also assumed that the lpr of more than 5 years reported on october 21, 2024 follows the central bank's policy interest rate and decreases by 0.2 percentage points to 3.65%.

after batch adjustments on october 31, the mortgage interest rate will be reduced to lpr (3.65%)-25bp, which is 3.4%. in other words, the mortgage interest rate will drop from 4.9% to 3.4%.