① Today, Guangdong made adjustments to the differentiated housing credit policies of 19 cities, including Zhuhai, Shantou, and Foshan. ② Yunnan Province announced that the province will implement the “517” new policy starting May 25. ③ Industry insiders believe that with the exception of very few megacities such as Guangzhou and Shenzhen in the north, the overall policy is a “relaxation to the end” trend to maximize the effects of policy easing on the property market.
Financial Services Association, May 24 (Reporter Guo Zishuo) After “May 17,” mortgage policy adjustments in various regions gradually reached a “climax.” Within a day, over 20 cities in Guangdong and Yunnan are about to enter the era of market-based mortgage interest rates, and the number of cities that adjust mortgages in a single day reached a record high.
A Financial Services Association reporter learned today from the Guangdong branch of the People's Bank of China that the Guangdong market interest rate pricing self-regulatory mechanism adjusts the differentiated housing credit policies of 19 cities including Zhuhai, Shantou, and Foshan in accordance with local real estate market situation changes and municipal government regulation requirements, including a minimum down payment of 15% for the first home, a minimum 25% for the second home, and the abolition of the lower interest rate limit. The above policy will be implemented from now on. Online signing of commercial housing sales contracts or real estate sales contracts can be implemented according to this standard.
On the same day, Yunnan Province announced that starting May 25, the province will comprehensively lower the minimum down payment ratio for commercial personal housing loans, and at the same time abolish the lower interest rate policy for commercial personal housing loans for the first and second housing units, and achieve marketization of mortgage interest rates. Over 20 cities have updated their mortgage policies, and this is also the largest time since the People's Bank of China issued policies such as the “Policy on Adjusting the Minimum Down Payment Ratio for Personal Housing Loans” and “On Adjusting the Interest Rate Policy for Commercial Personal Housing Loans” (hereinafter referred to as the “May 17” New Deal) on May 17.
Industry insiders believe that the abolition of the lower interest rate limits for commercial personal housing loans for the first home and second home means that the above cities have all marketed mortgage interest rates. Some analysts pointed out that the pace of policy relaxation in various regions is consistent. With the exception of very few megacities such as Guangzhou and Shenzhen in the north, the country's mortgage policy is generally relaxed in order to maximize the effects of policy easing on the property market.
Guangdong and Yunnan join the group of marketization of mortgage interest rates
A Financial Services Association reporter learned that from now on, in 19 cities in Guangdong, the minimum down payment ratio for commercial personal housing loans will be adjusted to no less than 15%, and the lower interest rate limit will be abolished; for households that take loans to buy a second commercial home, the minimum down payment ratio for commercial personal housing loans will not be less than 25%, and the lower interest rate limit will be lifted. The above adjustment plan is in line with the head office of the People's Bank of China on May 17.
For households with 2 or more housing units, 19 cities in Guangdong will implement individual housing loan approval rules on a case-by-case basis. For households that have settled the corresponding home purchase loans and also apply for a loan to purchase a home, banking financial institutions can carefully grasp and specifically determine the down payment ratio and loan interest rate level based on factors such as the borrower's solvency and credit status; while households that have not settled the home purchase loan will suspend the issuance of commercial personal housing loans.
Regarding the abolition of lower mortgage interest rate limits in 19 cities in Guangdong, Yan Yuejin, research director of the Yiju Research Institute, believes that this policy fully demonstrates that policies are being relaxed at a consistent pace in various regions. With the exception of very few megacities, the overall policy is a “relaxation to the end” trend, maximizing the effect of policy easing on boosting the property market.
It is worth noting that in this round, 19 cities in Guangdong adjusted their mortgage policies, not including Guangzhou and Shenzhen. In response, Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Urban Planning Institute, also pointed out in an interview that Guangzhou and Shenzhen are both first-tier cities and previously key regulatory cities. The relevant agencies are still relatively cautious about the city's decision to further reduce the down payment ratio. Meanwhile, after the 5.17 New Deal, the new housing market and second-hand housing markets in both Guangzhou and Shenzhen performed relatively well. We need to further observe whether the country can boost the market without changing the down payment ratio after releasing favorable conditions.
On the same day, the Yunnan branch of the People's Bank of China also announced that starting May 25, Yunnan Province will comprehensively reduce the minimum down payment ratio for commercial personal housing loans, the minimum down payment ratio for commercial personal housing loans for the first home will be adjusted from no less than 20% to no less than 15%, and the minimum down payment ratio for commercial personal housing loans for two housing units will be adjusted from no less than 30% to no less than 25%
What do you think of future mortgage policies in various regions?
On May 17, the People's Bank of China issued a notice on adjusting the interest rate policy for commercial personal housing loans, announcing the cancellation of the lower interest rate policy for commercial personal housing loans for first housing and two housing units at the national level; lowering the down payment threshold, with a down payment ratio of not less than 15% for the first home and no less than 25% for the second home; abolishing the lower mortgage interest rate; lowering the housing provident fund loan interest rate by 0.25 percentage points; and establishing 300 billion yuan of affordable housing reloans, etc.
One week after the “May 17” New Deal, various regions already showed a trend of adjusting mortgage policies. Up to now, commercial banks in at least 8 cities, including Wuhan, Hefei, Changsha, Xi'an, Jinan, Zhengzhou, Kunming, and Nanchang, have implemented the new policy of “reducing the down payment ratio for the first home to 15%.”
According to Yan Yuejin, Guangdong is inspired by local policies. Adopting such policies will help to further clarify the overall deployment of the province and reduce the cost of formulating local policies. This just shows that the problems faced by many cities are similar to the pressure on the property market. Provincial deployment will help improve policy effectiveness and better assist the positive development of the market.
Chen Wenjing, director of market research at the China Index Research Institute, said that according to central bank information, before the new deal, all other cities had chosen to implement the 20% and 30% national bottom line policy for down payments, with the exception of 8 cities in the north. It is expected that most cities will drop to 15% and 20% next. More cities will lower interest rates for first and second home loans, and third- and fourth-tier cities and ordinary second-tier cities are expected to prioritize policy adjustments.
However, Li Yujia also pointed out that since residents' income fundamentals have not changed significantly. If only the down payment ratio is lowered without lowering the mortgage interest rate, the actual effect may be limited.
Li Yujia believes that the essence of reducing the down payment ratio is to want residents to increase leverage. This is in line with past policies. What you need to pay attention to is the room for mortgage interest rates to fall. At present, interest rates on first and second home mortgages have dropped to historic lows. Interest rates for the first home in some cities have even dropped to 3.2 to 3.4%. Considering that banks have less room for interest spreads, there may be limited room for further reduction in mortgage interest rates when there is no significant decline in deposit-side costs.
According to Fitch Ratings, banks' profitability may be affected more significantly. Eliminating the minimum mortgage interest rate limit and lowering personal housing provident fund loan interest rates will further reduce banks' net interest spreads in 2024. Furthermore, weak demand for loans, lower quoted interest rates (LPR) in the loan market, repricing of mortgages, and the need for financial institutions to continue to support the real economy will also put further pressure on banks.