Guotai Junan released a research report stating that the central bank adjusted LPR1Y and 5Y, both reducing it by 10bp, similar to the beginning of the year. Both the chosen time and the magnitude of the reduction are relatively moderate, not aggressive. The bank believes that the reduction of interest rate points for mortgage loans and the adjustment of LPR for existing loans, considering the previous adjustment of interest rate points, will have a greater impact on existing loans. At the same time, it will help alleviate the difference in interest rates between new and old mortgages. The actual interest rate is still at a relatively high level, and the requirements for enterprise leverage are still high. Low leverage operation is still the preferred option. Meanwhile, continue to pay attention to the industry's restructuring progress, with beneficiaries including CIFI Hold GP (00884) and Sunac (01918).

According to China GTJA's view:

The central bank adjusted LPR1Y and 5Y, both reducing it by 10bp, similar to the beginning of the year. Both the chosen time and the magnitude of the reduction are relatively moderate, not aggressive.

In February 2024, LPR5Y was reduced by 25bp. Although the magnitude was larger than this time, it was still not aggressive. From the perspective of the actual interest rate, there was no significant decline. This reduction is smaller than the previous one and weaker than the earlier stage, so the information transmitted is also considered a moderate reduction.

Adjusting the add-on points for mortgage loans and the LPR for stock loans, considering that there has already been a reduction in add-on points in the previous period, this reduction in LPR has a greater impact on stock loans, while also helping to alleviate the difference in interest rates between new and old mortgage loans.

In the past few months, LPR has not been reduced. In order to support the demand for housing, most cities, including first-tier cities, have reduced interest rates by interest rate points. This has continuously widened the gap in interest rates for new and old mortgage loans. The last round of systematic reduction of stock mortgage loan interest rates to match new and old mortgage loans was at the end of September 2023. Even first-tier cities have reduced it by 40bp based on LPR. Therefore, the difference in interest rates between new and old mortgage loans has widened again. The reduction of LPR this time will help alleviate the difference in interest rates. It should be noted that the impact of interest rate differences is not reflected in suppressing demand, but will lead to increased early repayment.

The actual interest rate is still at a relatively high level, and there is expected to be room for an actual mortgage loan interest rate reduction in the future.

Although the nominal mortgage loan interest rate has been reduced multiple times in the past two years, the actual loan interest rate after inflation adjustment is still at a high level in recent years. This still has a certain inhibitory effect on demand, and it is expected that there is still room for a reduction in actual mortgage loan interest rates in the future.

To cope with high actual interest rates with low leverage, it is recommended that real estate companies continue to allocate resources on both ends.

The actual interest rate is still at a relatively high level, and the requirements for enterprise leverage are still high. Low leverage operation is still the preferred option. Meanwhile, continue to pay attention to the industry's restructuring progress, with beneficiaries including CIFI Hold GP and Sunac.

Risk warning: acceleration of market demand decline.