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great news, the existing mortgage interest rate adjustment is about to be implemented!

on september 29, the central bank issued the "people's bank of china announcement [2024] no. 11" (hereinafter referred to as the "announcement") to improve matters related to the interest rate pricing mechanism for commercial personal housing loans, clarifying that starting from november 1, personal housing loans both parties can negotiate to adjust the point increase range and the repricing cycle.

at the same time, the central bank guided the market interest rate pricing self-discipline mechanism to issue the "initiative on batch adjustment of existing mortgage interest rates", clarifying that in principle, all commercial banks should uniformly regulate existing housing loans (including first, second and above) before october 31, 2024. interest rates will be adjusted in batches. in the initiative, the central bank stated that commercial banks are encouraged to handle "one-click operations" through online channels such as online banking and mobile banking to provide convenience for borrowers.

on the evening of september 29, the four major state-owned banks, icbc, china construction bank, agricultural bank of china and bank of china, officially announced that they will issue specific operating rules starting from october 12, and batch adjustments will be completed by october 31, 2024. the four major banks have stated that they will follow up. announce relevant information on the bank's official website, wechat official account, branches and other channels.

the four major banks made a joint statement: resolutely implement the adjustment of mortgage interest rates

on the evening of september 29, the four major state-owned banks issued announcements stating that they would resolutely implement the central bank's "announcement" and actively respond to the market pricing self-discipline mechanism initiative.

icbc announced that in order to implement the decisions and arrangements of the party central committee and the state council, adapt to new changes in the supply and demand relationship in the real estate market, meet the people's new expectations for high-quality housing, and safeguard the legitimate rights and interests of housing consumers, icbc conscientiously implements the policy requirements of the "announcement" and actively responds to the self-discipline mechanism initiative, the adjustment of existing mortgage interest rates is being advanced in an orderly manner.

icbc stated that it will carry out interest rate adjustments for existing mortgage loans in accordance with the principles of marketization and rule of law and in compliance with laws and regulations. it plans to announce specific operational guidelines and related matters on october 12, 2024 through its official website, wechat official account, outlets, 95588 and other channels. and the batch adjustment of existing mortgage interest rates will be completed before october 31, 2024.

ccb stated on its official website, “in order to implement the decisions and arrangements of the party central committee and the state council, adhere to the political and people-oriented nature of financial work, respond to customer concerns, and reduce residents’ financing costs, our bank resolutely implements the “announcement” and actively responds to the initiative of the market interest rate pricing self-discipline mechanism. , and promote the batch adjustment of existing commercial personal housing loan interest rates in an orderly manner in accordance with the law.”

china construction bank stated that the bank is working hard to formulate an implementation plan for batch adjustments to existing mortgage interest rates, and plans to release specific operational details on october 12, 2024, and complete batch adjustments by october 31, 2024.

the agricultural bank of china announced on its official website that, "in order to implement the decisions and arrangements of the party central committee and the state council and promote the stable and healthy development of the real estate market, our bank resolutely implements the "announcement", actively responds to the initiative of the market pricing self-discipline mechanism, and is carrying out existing commercial individual housing in an orderly manner in accordance with the law. preparations for loan interest rate adjustments.”

the agricultural bank of china stated that it will provide convenient services through multiple channels in accordance with the principles of marketization and rule of law, and carry out interest rate adjustment work in accordance with laws and regulations. the bank will release specific operational matters on october 12, 2024, and unify them before october 31, 2024. implement batch adjustments to existing commercial personal housing loan interest rates.

bank of china announced: “in order to implement the decisions and arrangements of the party central committee and the state council, promote the stable and healthy development of the real estate market, and help expand domestic demand and promote consumption, bank of china resolutely implements the requirements of the announcement, actively responds to the initiative of the self-regulatory mechanism, and is orderly promoting the reduction of existing business in accordance with the law. sex personal home loan rates jobs.”

the bank of china stated that the bank will formulate implementation details in accordance with the principles of marketization and legalization, and make technical preparations at the same time. it plans to release detailed rules on october 12, 2024 through the official website, official wechat public account, loan agency banks and other channels. implementation details, and implement batch adjustments to existing mortgage interest rates before october 31, 2024.

according to the 2024 semi-annual reports of listed banks, brokerage china reporters found that as of the end of june this year, the total balance of personal housing loans of the six major state-owned banks was approximately 26.19 trillion yuan. specifically, china construction bank has the highest personal housing loan balance, reaching 6.38 trillion yuan, icbc 6.17 trillion yuan, agricultural bank of china 5.07 trillion yuan, bank of china 4.75 trillion yuan, postal savings bank 2.36 trillion yuan, and bank of communications 1.46 trillion yuan.

a loan of rmb 1 million is expected to save rmb 5,600 per year

regarding the latest policy of lowering existing mortgage interest rates, dong ximiao, chief researcher of china merchants union, said in an interview with a reporter from brokerage china that this adjustment to existing mortgage interest rates has three obvious characteristics: first, the adjustment targets include both existing first-home loans and other existing mortgages; secondly, , not only the existing floating rate mortgages can be adjusted, but also the existing fixed rate mortgages can be adjusted after they are converted into lpr plus points form; thirdly, the borrower can renegotiate the repricing cycle and the point range with the bank, thereby establishing a normalized and market-oriented adjustment mechanism.

he said that it only took five days from the announcement of the adjustment of existing mortgage interest rates by the governor of the people's bank of china pan gongsheng on september 24 to the official implementation today (september 29). it was fast and powerful, responding to the people's calls in a timely manner and effectively boost market confidence.

from an operational point of view, after the borrower completes the "one-click operation" through online banking, mobile banking and other channels, the bank will make batch adjustments uniformly. it is expected that for most mortgage borrowers, there is no need to go to a bank branch to apply, and the procedure is very simple and quick. in principle, 18 national commercial banks will issue operational details for batch adjustments to existing mortgage interest rates no later than october 12; in principle, all commercial banks will complete the adjustment work before the end of october. it is expected that starting in november, borrowers will be able to negotiate with banks to determine a new repricing cycle and other matters.

according to dong ximiao's calculations, taking an existing mortgage loan 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. after this adjustment, the existing mortgage interest rate is equivalent to the latest loan prime rate (lpr) minus 30 basis points (that is, 0.3 percentage points). the reduction in existing mortgage interest rates will help borrowers further reduce mortgage interest payments, increase residents' willingness and ability to consume, and also help stabilize home buyers' expectations, boost market confidence, and promote the healthy and stable development of the real estate market.

if we take into account the previous 20 basis points (i.e., 0.2 percentage points) reduction in the policy interest rate of the people's bank of china, the lpr may follow the 20 basis points (i.e., 0.2 percentage points) decrease on october 21. after the loan repricing, the adjusted existing mortgage interest rate level it will be significantly lower than 3.55%, falling to about 3.35%, and the mortgage interest rates of some borrowers will drop by more than 100 basis points (i.e. 1 percentage point), which will significantly save the interest expenses of mortgage borrowers.

"after this batch adjustment is completed, it is expected that the decline in existing mortgage interest rates will reduce bank interest income by approximately 150 billion yuan per year. however, after the interest rate difference between new and old mortgages narrows, the phenomenon of early repayment may be significantly reduced, which will help banks stabilize loan scale and improve loan quality." dong ximiao believes.

he also believes that considering that the central bank has lowered the deposit reserve ratio by 0.5 percentage points and the policy interest rate by 20 basis points (i.e. 0.2 percentage points), it is expected to drive down interest rates such as the medium-term lending facility (mlf) interest rate and also save bank liability costs. it will help improve banks' sustainable operating capabilities and provide necessary support for banks to better support the real economy. taking these policies and measures into consideration, after the adjustment of existing mortgage interest rates, banks' net interest margins are expected to remain basically stable, and banks' ability to develop steadily and serve the real economy will remain basically unchanged.

may benefit 150 million people

recently, pan gongsheng, governor of the people's bank of china, responded to public concerns about interest rate adjustments for existing mortgage loans.

on september 24, pan gongsheng, governor of the people's bank of china, announced a number of incremental monetary policies at a press conference held by the state council information office, including lowering existing mortgage interest rates and unifying the minimum down payment ratio for mortgage loans. commercial banks will be guided to lower existing mortgage interest rates to near the new mortgage interest rates. the average reduction is expected to be about 0.5 percentage points.

he said that overall, banks' reduction in existing mortgage interest rates will help further reduce borrowers' mortgage interest payments, promote the expansion of consumption and investment, and also help reduce early loan repayments. this reduction in existing mortgage interest rates is expected to benefit 50 million households with a population of 150 million, reducing household interest expenses by an average of about 150 billion yuan per year.

pan gongsheng also pointed out that lowering the interest rates of existing mortgage loans by banks 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.

at the end of august this year, data released by the central bank showed that as of the end of the second quarter of 2024, the national personal housing loan balance was 37.79 trillion yuan, a year-on-year decrease of 2.1%, or about 0.81 trillion yuan less than the end of the second quarter of 2023.