After Beijing released the new policy of adjusting the lower limit of housing loan interest rates and the minimum down payment ratio, banks in the Beijing area quickly implemented it. Today, several credit department staffs of banks in the Beijing area have stated that the first home loan interest rate has been reduced to 3.5%, and the second home loan interest rate has been reduced to 3.7% (outside the fifth ring road) or 3.9% (inside the fifth ring road). In addition, the down payment ratio for the first home has been reduced to 20%. The new adjustments will start from today.

A personal loan staff member of a large branch in Tongzhou, Beijing, said that the new policy started today, if the new loan for the first home loan is adjusted to 3.5%, and the down payment ratio is reduced to 20%. Another personal loan staff member of a large branch in Shijingshan, Beijing, also stated that the bank has implemented the latest notice, and the interest rate for the first home loan has been adjusted to 3.5%, previously 3.95% or 4.05%, and the down payment ratio for the first home loan has been adjusted to 20%. In addition, the interest rate for the second home loan outside the fifth ring road has been adjusted to 3.7%, and within the fifth ring road is 3.9%. A personal loan staff member of a city commercial bank in the Beijing area also stated that the new interest rates and down payment ratio will start today.

On June 26, the Beijing Municipal Commission of Housing and Urban-Rural Development, the People's Bank of China Beijing Branch, the Beijing Regulatory Bureau of the China Banking and Insurance Regulatory Commission, and the Beijing Housing Provident Fund Management Center jointly issued the "Notice on Optimizing the Policy Measures for the Stable and Healthy Development of the Real Estate Market in This City", which adjusts the minimum down payment ratio and interest rate lower limit for commercial personal housing loans issued in Beijing in accordance with the principle of differential policies for different cities. The notice will be implemented from June 27, 2024.

Among them, the minimum down payment ratio for the first home is adjusted to no less than 20%, and the lower limit of loan interest rate is adjusted to no less than 45 basis points lower than the corresponding period of the loan market quoted interest rate (LPR). The lower limit of the home loan interest rate for more than 5 years is currently 3.5%. For the second home within the fifth ring road, the minimum down payment ratio is adjusted to no less than 35%, and the lower limit of the loan interest rate is adjusted to not less than the corresponding period of the loan market quoted interest rate (LPR) minus 5 basis points. The lower limit of the home loan interest rate for more than 5 years is currently 3.9%. For the second home outside the fifth ring road, the minimum down payment ratio is adjusted to no less than 30%, and the lower limit of the loan interest rate is adjusted to no less than 25 basis points lower than the corresponding period of the loan market quoted interest rate (LPR). The lower limit of the home loan interest rate for more than 5 years is currently 3.7%.

The notice points out that banks and other financial institutions should reasonably determine the specific down payment ratio and interest rate level for each loan based on their own operating conditions and customer risk conditions on this basis.

With the adjustment of housing loan interest rates and down payment ratios by banks in the Beijing area, the interest rates for the second home loan in Beijing have also reached the "3" level. Prior to the policy adjustment, the first home loan interest rate in non-CBD areas of Beijing was 3.95%, and the second home loan interest rate was 4.5%; the first home loan interest rate in the CBD areas was 4.05%, and the second home loan interest rate was 4.55%.

The reduction in mortgage interest rates will further reduce housing costs. Yan Yuejin, research director of the E-House Research Institute, said that based on the pricing formula of Beijing's first home mortgage interest rate before, the non-CBD areas was LPR+10 BP, and the CBD areas was LPR+0BP. Taking the CBD area as an example, according to the latest LPR data, which is 3.95%, the previous interest rate was 4.05%. After the adjustment, the lowest interest rate for the first home mortgage in Beijing is now 3.5%. Calculated based on a loan principal of one million yuan and a 30-year equal principal and interest, the original total interest paid for the mortgage was 729,000 yuan. Based on the new policy calculation, the total interest paid is now 617,000 yuan. Therefore, this calculation shows that the new mortgage interest rate policy has reduced housing costs by 113,000 yuan.

Prior to the adjustment in Beijing, Shanghai, Guangzhou, and Shenzhen in first-tier cities had already made adjustments at the end of May, and the average housing loan interest rate for 100 cities in May also continued to decline. According to the monitoring data from the Beike Research Institute, in May, after the "517" new policy for the real estate market landed, the average commercial loan interest rate for the first home in 100 cities dropped to 3.45%, and the average second home loan interest rate dropped to 3.90%, a decrease of 12 BP and 26 BP respectively from the previous month. The average second home loan interest rate in 100 cities entered the "3" level for the first time since 2019. In terms of the minimum down payment ratio for commercial loans, as of the end of May, more than 80% of cities in 100 cities had clearly implemented a minimum down payment of 15% for the first home and 25% for the second home.

Industry insiders pointed out that the introduction of this policy in Beijing means that the new real estate policies of first-tier cities have all landed. The introduction of this policy can to a certain extent drive the repair of the mortgage loan demand for the residential sector, and the overall market confidence is expected to stabilize. Chen Wenjing, market research director of Zhongzhi Research Institute, also stated that this time Beijing's implementation of a policy to reduce the down payment ratio, reduce the mortgage interest rate, give more policy support to families with multiple children, and support the exchange of houses for new ones, is expected to significantly alleviate the wait-and-see mentality of home buyers, and promote the entry of housing demand into the market. In addition, Beijing's optimization policy this time has also released a bullish signal, which is conducive to the overall market expectation repair. In the short term, the activity of the Beijing real estate market is expected to increase, and the chain turnover of new and second-hand houses is expected to accelerate. The active volume of second-hand housing transactions will also release more improvement demand for new housing.