The property market is heavy and good!
Today, the Central Bank and the Banking and Insurance Regulatory Commission issued the Circular on issues related to the Adjustment of differentiated Housing Credit policies, releasing important information:Based on the current five-year LPR4.6%, the interest rate on first home loans can be as low as 4.4 per cent.
In order to adhere to the positioning that houses are used for living and not for speculation, fully implement the long-term mechanism of real estate, support all localities to improve real estate policies in the light of local conditions, and support rigid and improved housing demand, to promote the stable and healthy development of the real estate market, in accordance with the relevant arrangements of the State Council, the relevant matters concerning the differentiated housing credit policy are hereby notified as follows:
1. For households who purchase ordinary self-housing with loans, the lower limit of the interest rate of commercial individual housing loans for the first set of housing shall be adjusted to no less than 20 basis points less than the quoted interest rate of the loan market for the corresponding term, and the lower limit of the interest rate policy for commercial individual housing loans for second sets of housing shall be implemented in accordance with the current provisions.
Second, on the basis of the unified lower limit of loan interest rates throughout the country, the dispatched offices of the people's Bank of China and the CBIC shall, in accordance with the principle of "implementing policies according to cities", guide the self-regulatory mechanism of interest rate pricing in provincial markets, according to the changes in the real estate market situation of the cities within their jurisdiction and the requirements of the city government regulation and control, independently determine the lower limit of the interest rate of commercial individual housing loans for the first and second houses in the cities under their jurisdiction.
This means that, based on the current five-year LPR4.6%, the interest rate on first home loans could be as low as 4.4 per cent. Yan Yuejin, research director of the think tank center of Yiju Research Institute, believes that the central bank issued a special document on differentiated mortgage policy for the first time, which fully reflects the determination of the current housing loan to continue to develop and reverse the decadent trend of the recent real estate transaction market.
The mortgage of 1 million can be repaid more than 40,000 less.
According to the "Statistical report on loan orientation of Financial institutions in the first quarter of 2022" released by the central bank, the current national personal mortgage loan interest rate is 5.42%. If calculated on the basis of minus 20 basis points, the real interest rate would be 5.22%. We can measure the changes in mortgage interest rates and costs of home buyers. Calculated on the basis of 1 million loan amount, equal principal and interest, and 30-year monthly repayment:
1) 5.42% of the cases: at this time, the monthly contribution is 5627.8 yuan, and the total interest is 1.026 million yuan.
2) 5.22% of the cases. At this time, the monthly payment is 5503.47 yuan and the total interest is 981200 yuan.
According to this calculation, the monthly contribution is reduced by 124.33 yuan, and the total interest is reduced by 44800 yuan.
Generally speaking, if banks can indeed reduce their loans by 20 basis points according to the central bank policy in practice, home buyers with 1 million loans can pay back more than 100 yuan less each month, or more than 40, 000 yuan less in 30 years.
This time, the central bank has made clear an important train of thought, that is, the lower limit of the interest rate of commercial personal housing loans for the first set of housing will be adjusted to no less than 20 basis points less than the quoted interest rate of the corresponding maturity loan market. From this statement, we can see that there are new requirements and supporting policies for the downward trend of loan interest rates.
1. The lower limit of interest rates allows for further reduction, which makes commercial banks have more room for loans, which will help to better promote the reduction of real interest rates on housing loans.
2. The expression of a similar reduction of 20 basis points fully shows that the intensity of the reduction is relatively large, which will also guide banks to make better loan policies in the future, especially to promote the interest rates of some low-cost loans.
3. This kind of reduction mainly emphasizes the first suite, in fact, it also hopes that the purchase cost of rigid demand can be further reduced, which is a very good policy to support rigid demand.
The policy choice of the central bank was released over the weekend, which also shows that the guidance of the policy reduction is very urgent and necessary, fully reflecting the guidance of the financial sector towards the current reduction in mortgage costs. Yan Yuejin believes that it will have four important effects:
1. It will help to guide local governments and banking institutions to further adjust their loan policies, especially in terms of mortgage interest rates, and fully implement preferential policies for low-cost housing purchases.
2. It will help to guide housing enterprises to actively push the market and sell, especially combined with the recent advantage of low interest rate cost of housing loans, encourage housing enterprises to actively sell, and fully promote the activity of real estate transactions.
3. It will help to further reduce the cost of property buyers, and at the same time, combined with the recent continuous relaxation of local policies, it can objectively further promote the reduction of the pressure on home buyers to buy houses. Policies such as reducing down payment, lowering mortgage interest rates, loosening restrictions on the sale of second-hand homes and loosening restrictions on purchases will create better conditions for active market transactions in mid-late May and the follow-up.
4. It is helpful for all localities to carry out real estate loan work based on the actual situation, and some cities with weak market transactions will actively carry out looser housing loan policies based on differentiated credit policy tools.
Yan Yuejin said that this policy is actually equivalent to the lowest interest rate of 4.4% in the future, which is very favorable. But the actual operation depends on the local banks and other regulations. However, from the point of view of the further relaxation of the current housing loan policy for new citizens, new citizens may be able to get these ultra-low interest rate loans in the future. This may also be a new meaning of the policy's support for rigid demand, reflecting the state's support and protection for new citizens to buy houses.
Everbright Securities believes that the new social finance in April was significantly lower than market expectations and the same period in previous years, and that a sharp year-on-year contraction in on-balance-sheet credit was the main source of drag, especially housing, consumption and operating loans. As a result, its outlook policy is expected to speed up in an all-round way, with a reduction in LPR in May. Monetary policy is expected to accelerate the downward guidance of LPR quotation rates through stock and incremental policy tools, and LPR is expected to cut in May. In April, the central bank has significantly reduced the debt costs of financial institutions by lowering reserve requirements, turning over balance profits and establishing a market-oriented adjustment mechanism of deposit interest rates. Looking forward, the central bank is expected to take more measures to reduce the debt costs of financial institutions and guide social financing costs to continue to decline.
The purpose of the policy is to be stable, not active.
Li Yujia, chief researcher of the Housing Policy Research Center of Guangdong Planning Institute, believes that the central bank's adjustment of differential housing credit policy shows that the current speed and extent of the real estate decline has exceeded the bottom line of tolerance and has affected steady growth.
He analyzed that in the context of high housing prices, the pressure on new citizens to buy houses is unprecedented, and the current housing price level has reached an all-time high. in this case, it is necessary to reduce costs in order to truly dredge the mismatch between supply and demand in the property market. At present, there is demand in the property market, and the strongest demand is for new citizens, who basically buy houses for the first time, but their pressure is very great, especially under the background of a marked decline in income and expectations under the epidemic, if the cost of buying a house is not reduced, it is impossible to fundamentally solve the weakening demand in the property market and the decline in pessimistic confidence in expectations. So the central bank cut the mortgage interest rate on the first suite.
It should be noted that this policy has not been adjusted for second homes, which shows that our policy orientation still does not want real estate to absorb more funds from society, and does not want social funds to flow into real estate too quickly. This is the principle of "housing without speculation". Our policy is to do something and not to do something, and there is a bottom line, not to save the market, still less to relax our financial policy in order to stimulate real estate. The purpose of the policy is to stabilize real estate, not to make it active again. Don't expect real estate to play a big role in the new round of steady growth. Our policy objective is to stabilize the property market so that it will not cause obvious drag on the economy or cause systemic risks, that's all.
Under the current high housing prices, the interest rate cut only reduces the monthly payment, but it cannot reduce the high housing prices and high costs. Li Yujia believes that in order to comprehensively reduce the cost, it is necessary to reduce the cost of the whole chain, including the cost of land, taxes and fees. It also includes the financial cost this time. Only in this way can more new citizens have the ability to buy houses.
Edit / lydia