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before the national day, the central bank issued an announcement on interest rate adjustments for existing mortgage loans. on the same day, the market interest rate self-regulatory pricing mechanism also announced batch adjustments to the differences in existing mortgage interest rates. what impact will the adjustment of existing mortgage loan interest rates have on the fundamentals of banks?citic securitiesxiao feifei, chief analyst of the banking industry, said in the "watch the world and china" series of live broadcasts on the evening of october 6 that starting from november, the entire existing mortgage interest rate will drop significantly. taking into account the possible follow-up just mentioned measures to reduce capital costs and repricing in the first quarter of next year will continue to have an impact, but the overall impact on interest rate spreads is limited.

the following are some of xiao feifei’s wonderful views:

before the national day, the people's bank of china issued an announcement on interest rate adjustments for existing mortgage loans, which is the 11th announcement in 2024. on the same day, the market interest rate self-regulatory pricing mechanism also announced a batch adjustment of existing mortgage interest rate differences. among them, we actually think that the first one is to make a very clear arrangement for the adjustment of the entire existing mortgage loan interest rate. i believe investors can also see it in many related reports, mainly:

first, the lower limit of existing mortgage loan interest rates has been lowered. the result of the existing adjustment is that the point increase rate is not less than lpr-30bp, and not lower than the lower limit of new mortgage loan interest rates currently implemented in the city where the city is located. in fact, most places across the country implement the lpr-30bp policy. only some cities have lower interest rates for new mortgage loans, and there may be some city-specific policy characteristics. we believe that in the future, commercial banks will gradually release some operational details before october 12th. before october 30th, this is also the self-regulatory pricing mechanism that will implement batch adjustments to existing mortgage interest rates. at the same time, the central bank's announcement also clarified that the future mortgage loan interest rates from november 1st will still have a landing result that can be further renegotiated by borrowers and banking financial institutions. this is the main content of the policy.

we see that the entire existing mortgage loan interest rate policy actually reflects several very important changes: first, the pricing mechanism is more flexible and market-oriented for the entire mortgage loan, which not only allows changes in the increase or decrease in interest rates, it also cancels the original repricing cycle of one year, and now we can independently negotiate the repricing cycle; thirdly, the pricing form can take the form of fixed interest rate orfloating interest rate. overall, we believe that starting from november, the entire existing mortgage interest rate will drop significantly, which will have a lasting impact on banks' asset returns.

what is the specific range? in fact, at the state council information office press conference on september 24, the central bank also mentioned that it is expected to guide the entire existing mortgage loan interest rate to fall by about 0.5%, reducing the total interest expenses of households by 150 billion. based on this data, we calculated the annual impact on the annualized return on assets of commercial banks, and it should be around 4.6 depths. taking into account the possible subsequent measures to reduce the cost of funds just mentioned, we believe that repricing will continue to have an impact in the first quarter of next year, but the overall impact on interest rate spreads will be limited.