(Leju Holdings Ltd / Sun Subo / tr. by Phil Newell)
The central bank and the Bancassurance Regulatory Commission issued a candy to the property market on the eve of May 20-- "adjusting the lower limit of interest rates for commercial personal housing loans for the first set of housing." Subsequently, on May 20, the central bank cut the five-year LPR rate to 4.45% and the one-year rate to 3.7%.
Over the weekend, first-tier cities responded quickly.
On May 23, the mortgage rates of banks in Beijing and some banks in Shanghai have been reduced by 15 basis points in accordance with the new five-year LPR quotation.
According to the Circular on issues related to the Adjustment of differentiated Housing Credit policies issued by the Central Bank and the Bancassurance Regulatory Commission, for ordinary self-housing families who purchase loans, the lower limit of the first home loan interest rate is not lower than the corresponding term loan market quoted interest rate minus 20 basis points, and the second home loan interest rate is implemented in accordance with the existing policy.
Cut the floor of mortgage interest rates, cut LPR interest rates of these two major good news, once again boosted the confidence of the property market.
Data show that from January to April 2022, the sales area of commercial housing in Beijing was 2.529 million square meters, down 15.1% from the same period last year. Of this total, the sales area of residential buildings was 1.854 million square meters, down 25.9 percent, that of office buildings was 156000 square meters, up 9.8 percent, and that of commercial and operating rooms was 144000 square meters, up twice as much.
From January to April 2022, the sales area of commercial housing in Shanghai was 4.2594 million square meters, down 17%. Of this total, residential sales area was 3.61 million square meters, down 9.9 percent.
The transaction area of new commercial housing in 100 cities across the country is expected to be 19.63 million square meters in May, an increase of 9 percent from the previous month, according to the Yiju Research Institute. Combined with the central bank's policies such as a cut in mortgage interest rates, the data for late May are likely to be further improved, which can help improve the monthly transaction data in May.
In addition, the data show that the transaction area of newly built commercial housing in May is expected to be 162,952 and 8.5 million square meters respectively, with month-on-month increases of-1%, 9% and 10%, and year-on-year increases of-38%,-61% and-57%. First-tier cities are obviously affected by the drag of Shanghai and Beijing, and the market transaction data in May are hard to say on a month-on-month basis.
In this context, Beijing and Shanghai have responded to the "notice" of the central bank and the Bancassurance Regulatory Commission and started the rescue mode. Among them, the interest rate on the first home loan in Beijing was reduced to 5% from 5.15% before, and the interest rate on the second home was reduced to 5.5% from 5.65% before. The interest rate on the first home loan in Shanghai fell to 4.8% from 4.95% previously, and the interest rate on the second home fell to 5.5% from 5.65% before.
Taking the commercial loan of 1 million yuan, the term of 25 years and the method of repayment as the equal principal and interest, after this downward adjustment:
The monthly payment for the first home in Beijing is reduced by about 88 yuan, the total repayment is reduced by about 26000 yuan, and the monthly payment for the second home is reduced by about 90 yuan, while the monthly payment for the first home in Shanghai is reduced by about 82 yuan, and the second home is reduced by about 90 yuan.
An individual loan official at a branch of a large bank in Beijing said that the bank had been implemented in accordance with the new five-year LPR, reducing the first home loan interest rate to 5 per cent from the previous 5.15 per cent and the second to 5.5 per cent. With a commercial loan of 1 million yuan, a maturity of 25 years and a repayment method as the same amount of principal and interest, the monthly supply of the first home will be reduced by about 88 yuan and the second home by about 90 yuan after the reduction.
Xu Xiaole, chief market analyst at KE Holdings Inc. Research Institute, said that the decline in interest rates is conducive to reducing rigid demand and improving demand for housing purchase costs. Combined with the previous policy of abolishing housing recognition and loan in some cities, transactions in the real estate market are expected to improve. Housing prices will speed up bottoming and repair.
Chen Zhi, vice president and secretary general of the Beijing Real Estate Association, said in an interview that from the perspective of the government, house prices in Beijing have risen by less than 5%, and the trend of house prices has not risen substantially. At present, it seems to be a steady and slightly upward trend.
In addition, Feng Jun, president of the China Real Estate Association, has also pointed out that under the overall shortage of supply in Beijing, Shanghai, Guangzhou and Shenzhen, the pressure for a rebound in house prices will still exist, of course, there may not be an immediate rebound. In the presence of such pressure, the focus of government policy is to encourage legitimate housing consumption demand and meet the diversity of housing demand, rather than encouraging investment in the direction of real estate speculation.
Feng Jun said that for consumers, it is correct and rational to view the fluctuation, decline or rise of house prices; for developers, do not take advantage of the repair of the market to take advantage of the opportunity to raise prices and beat down market confidence. Do well between the two.