Source: Brokers China
It's a huge benefit, and it finally came to fruition!
On the evening of August 31, the Central Bank and the State Administration of Financial Supervision issued a number of important notices. The details are as follows:
Notice of the People's Bank of China and the State Administration of Financial Supervision and Administration on matters relating to lowering interest rates for the first housing loan in stock
The headquarters of the People's Bank of China in Shanghai, branches of all provinces, autonomous regions, municipalities directly under the Central Government, and planned separate municipalities; each country has commercial banks, China Post Savings Bank, and various joint-stock commercial banks:
In order to implement the decisions and arrangements of the Party Central Committee and the State Council, adhere to the position that houses are for living and not for speculation, guide commercial personal housing loan borrowers and lenders to adjust and optimize assets and liabilities in an orderly manner, and standardize the housing credit market order, the notice on matters relating to reducing the stock and interest rates for commercial personal housing loans is as follows:
1. The first housing commercial personal housing loan in stock refers to the first housing commercial personal housing loan issued by a financial institution before August 31, 2023 and for which a contract has been signed but not issued, or other commercial personal housing loans for housing stock where the borrower's actual housing situation meets the standards for the first housing unit in the city where it is located.
2. As of September 25, 2023,Borrowers of the first housing commercial personal housing loan in stock can apply to the lender financial institution, and the financial institution will issue a new loan to replace the first housing commercial personal housing loan in stock. The interest rate level for newly issued loans is determined by independent negotiations between financial institutions and borrowers, but the amount of points added to the loan market quoted interest rate (LPR) must not be lower than the lower limit of the interest rate policy for the first housing commercial personal housing loan in the city where the original loan was issued. The newly issued loan can only be used to repay the first housing commercial personal housing loan in stock; it is still included in the management of commercial personal housing loans.
3. Starting from September 25, 2023, borrowers of the first housing commercial personal housing loan in stock can also apply to the lender financial institution to negotiate a change in the interest rate level agreed upon in the contract. The interest rate level of the loan contract after the change shall comply with the provisions of Article 2 of this Notice.
4. Financial institutions should strictly implement relevant regulatory requirements, conduct a thorough and substantive review of the use of loans such as operating loans and personal consumer loans applied for by borrowers, and clearly indicate risks. Intermediaries that assist borrowers to use operating loans and personal consumption loans to replace commercial personal housing loans in violation of regulations are prohibited from cooperating, and seriously deal with insiders who commit such acts.
5. Financial institutions should urgently formulate specific operating rules, organize and implement them, improve service levels, respond to borrowers' applications in a timely manner, take convenient measures as much as possible, reduce borrowers' operating costs, and ensure that the relevant requirements of this Notice are implemented.
6. The People's Bank of China and all branches of the General Administration of Financial Supervision shall immediately forward this Notice to local legal financial institutions under their jurisdiction to urge implementation and effectively maintain market order.
This notice takes effect from September 25, 2023. If the previous relevant regulations are inconsistent with this notice, this notice shall prevail.
Notice of the People's Bank of China and the State Administration of Financial Supervision and Administration on Adjusting and Optimizing Differentiated Housing Credit Policies
The headquarters of the People's Bank of China in Shanghai, branches of all provinces, autonomous regions, municipalities directly under the Central Government, and planned separate municipalities; each country has commercial banks, China Post Savings Bank, and various joint-stock commercial banks:
In order to implement the decisions and arrangements of the Party Central Committee and the State Council, adhere to the position that houses are for living and not for speculation, adapt to the new situation where the supply and demand relationships in China's real estate market have changed significantly, better meet the demand for rigid and improved housing, and promote the stable and healthy development of the real estate market, the People's Bank of China and the State Administration of Financial Supervision and Administration have decided to adjust and optimize differentiated housing credit policies. The relevant matters are hereby notified as follows:
1.For residential households that take out loans to buy commercial housing, the minimum down payment ratio for a commercial personal housing loan for the first home is uniform at least 20%, and the minimum down payment ratio for a commercial personal housing loan for a second home is uniform at least 30%.
II.The lower interest rate policy for the first set of housing commercial personal housing loans is implemented in accordance with current regulations, and the lower interest rate policy for the second set of housing commercial personal housing loans was adjusted to not lower than the market quoted interest rate for loans of the corresponding term plus 20 basis points.
3. The agencies dispatched by the People's Bank of China and the State Financial Supervision Administration guide each provincial market interest rate pricing self-regulation mechanism in accordance with the principles of city-specific policies. According to the real estate market situation in each city within its jurisdiction and the regulatory requirements of the local government, they independently determine the minimum down payment ratio and lower interest rate for commercial personal housing loans for the first and second housing units in each city within their jurisdiction.
4. Banking financial institutions shall reasonably determine the specific down payment ratio and interest rate level for each loan based on each provincial market interest rate pricing self-regulation mechanism, taking into account factors such as the institution's operating conditions and customer risk status.
Relevant officials from the People's Bank of China and the State Administration of Financial Supervision and Administration answer reporters' questions on adjusting and optimizing housing credit policies
On August 31, the People's Bank of China and the General Administration of Financial Supervision jointly issued the “Notice on Adjusting and Optimizing Differentiated Housing Credit Policies” and the “Notice on Matters Relating to Lowering Interest Rates on First Housing Loans in Stock”. The responsible comrade answered questions from reporters regarding policy adjustments.
Q: What is the background of the adjustment and optimization of differentiated housing credit policies?
Answer: On July 24, the Politburo meeting of the Central Committee made it clear to adapt to the new situation where there have been major changes in the supply and demand relationship in China's real estate market, adjust and optimize real estate policies in due course, and make good use of the policy toolbox according to urban policies. On July 31, the executive meeting of the State Council proposed introducing policies and measures conducive to the stable and healthy development of the real estate market according to different needs, different cities, etc., to speed up research and construction of a new development model for the real estate industry.
In order to implement the decisions and arrangements of the Party Central Committee and the State Council, the People's Bank of China and the General Administration of Financial Supervision issued a notice to adjust and optimize the current differentiated housing credit policies, support all regions to make good use of the policy toolbox in line with urban policies, guide the actual down payment ratio and interest rate for personal housing loans to decline, and better meet the demand for rigid and improved housing.
Q: What is the focus of this differentiated housing credit policy adjustment and optimization?
Answer: The first is to unify the minimum down payment ratio policy for commercial personal housing loans across the country. There is no longer a distinction between cities with “purchase restrictions” and cities that do not implement “purchase restrictions”. The minimum down payment ratio policy for commercial personal housing loans for the first home and the second home is unified to not be less than 20% and 30%.
The second is to adjust the lower limits of the two housing interest rate policies to no less than the market quoted interest rate (LPR) for loans of the corresponding term, plus 20 basis points. The lower limit of the first housing interest rate policy is still no less than the LPR for the corresponding period minus 20 basis points.
Each region can independently determine the minimum down payment ratio and lower interest rate for the first and second housing units within its jurisdiction in accordance with the principles of city-specific policies and according to the local real estate market situation and regulatory needs.
Q: Why lower the interest rate for the first home loan in stock?
Answer: The relationship between supply and demand in China's real estate market has changed significantly in recent years. Borrowers and banks are demanding that assets and liabilities be adjusted and optimized in an orderly manner. The decline in interest rates on stock housing loans can save interest expenses for borrowers and is conducive to expanding consumption and investment. For banks, it can effectively reduce the phenomenon of early loan repayment and reduce the impact on bank interest income. At the same time, it is also possible to reduce the space for illegal use of operating loans and consumer loans to replace existing housing loans, thereby reducing hidden risks. In order to better adapt to the new situation described above, the People's Bank of China and the General Administration of Financial Supervision clearly follow the principles of marketization and the rule of law, and support and encourage banks and borrowers to negotiate and adjust interest rates for the first housing loan in stock.
Q: Which stock of first home loans can I apply for a lower interest rate? How do I apply?
Answer: The first eligible housing loan in stock is a commercial personal housing loan for stock housing that has been issued by a financial institution before August 31, 2023, has signed a contract but has not been issued, and where the borrower's actual housing situation meets the first housing standards in the city where it is located.
For eligible housing loans in stock, starting from September 25, 2023, borrowers can voluntarily apply to lender banks. Banks are also encouraged to provide more convenient services to borrowers by issuing announcements and batch processing. In terms of adjustment methods, it is possible not only to change the housing loan interest rate plus point margin agreed in the contract, but also to have the bank issue a new loan to replace the stock loan. The specific interest rate adjustment range is determined by negotiation between borrowers and lenders, but the adjusted interest rate cannot be lower than the lower limit of the first housing loan interest rate policy set in the city where the original loan was issued. Newly issued loans can only be used to repay existing loans, and are still included in commercial personal housing loan management.
The People's Bank of China and the General Administration of Financial Supervision will pay close attention to market developments, guide banks and customers to conduct independent negotiations in accordance with the principles of marketization and the rule of law, reduce interest rates on housing loans in stock in an orderly manner, and maintain a competitive order in the market.
According to information, lowering interest rates on existing mortgages can save residents' interest burdens. Relevant sources close to supervision said that after interest rates on commercial personal housing loans for the first housing stock are adjusted, the financial burden on tens of millions of households and hundreds of millions of residents will drop markedly, with an average drop of about 0.8 percentage points. Take a stock mortgage of 1 million yuan, a 25-year term, and an original interest rate of 5.1% as an example. Assuming that the mortgage interest rate falls to 4.3%, the borrower's interest expenses can be saved by more than 5,000 yuan per year, so there is no need to cut back on clothing and food to repay the loan early, significantly increasing consumption capacity.
edit/lambor