Caixin News Agency, September 24th (Reporter Zou Juntao) This morning, PBOC Governor Pan Gongsheng stated at a press conference held by the State Council Information Office that for existing real estate loans to be transferred between banks, the initial focus will be on implementing internal mortgage transfers within this bank, with consideration of inter-bank transfers in the next step.

How will the initial implementation of internal mortgage transfers for existing real estate loans be carried out? Zeng Gang, Deputy Director of the National Institute of Financial and Development at Renmin University, told Caixin reporters that based on industry experience, it is expected that banks will negotiate with customers and replace the original mortgage with a new one. This approach makes it easier for banks to operate.

Zeng Gang further stated that by re-signing contracts internally to implement mortgage transfers, it can be considered as the same loan within the bank. He believes that this is not expected to have a significant impact on the existing real estate loan market.

PBOC Responds to 'Inter-bank Mortgage Transfers': Initial Implementation to Start with Internal Transfers within the Bank

At today's press conference held by the State Council Information Office, adjustments to existing real estate loan interest rate policies became a focus of market attention. PBOC Governor Pan Gongsheng stated during the conference that commercial banks will be guided to lower existing real estate loan interest rates to levels close to those for new mortgage loans, with an average expected decrease of approximately 0.5 percentage points.

Of note, there were previous reports that the current round of real estate loan policy adjustments intended to lower existing real estate loan rates while allowing for inter-bank mortgage transfers. In response to this, Pan Gongsheng stated during the conference that for existing real estate loans to be transferred between banks, the initial focus will be on implementing internal mortgage transfers within this bank, with consideration of inter-bank transfers in the next step.

Chief Macro Analyst Wang Qing from Orient Securities expressed in an interview today that the emphasis on 'initially implementing internal mortgage transfers within this bank' is mainly because existing real estate loans are still high-yield, low-risk quality assets for banks. Allowing inter-bank mortgage transfers will intensify competition between banks, which is not conducive to the stability of the mortgage market, especially causing a strong impact on larger banks with a high proportion of existing real estate loans.

As for the initial implementation of the mortgage transfer plan within the bank, the industry believes that most likely the original mortgage contracts will be invalidated as needed, and then new mortgage contracts will be signed.

Zeng Gang believes that it is expected that the banks will negotiate with customers to sign new mortgage contracts, with a new mortgage replacing the original one. Zeng Gang further pointed out that during this process, both parties are expected to have two choices: one is to lower the existing mortgage loan interest rate or keep the original term; the other choice is to adopt a new mortgage rate, while the term is also redefined, possibly shortened or lengthened.

The industry expects that the current stock housing loan market will not be greatly affected.

As for whether the bank's internal mortgage transfer plan will have an impact on the current stock housing loan market, Zeng Gang believes that from the bank's internal perspective, it is expected not to have a significant impact.

Zeng Gang's analysis indicates that for banks internally, using the method of resigning mortgage contracts and replacing the original mortgage loan with a new one can actually be considered the same loan. Therefore, for the bank's asset side and mortgage loan business, internal mortgage transfers will not have a significant impact on them, and therefore will not have a major impact on the stock housing loan market.

In addition, Zeng Gang believes that the reduction of stock housing loan rates is expected to have a short-term impact on bank interest spreads, but needs a comprehensive evaluation. If banks can achieve an "exchange of price for quantity" later on, it will actually bring positive effects for the banks themselves.

Huajin Securities pointed out today that the lowering of stock housing loan rates by around 0.5 percentage points to near new housing loan rates is aimed at avoiding a significant increase in housing loan non-performing rates, thus avoiding causing a greater degree of secondary domestic demand contraction and the transmission of real estate risks to systemic financial risks.

In addition, regarding the subsequent adjustment of stock housing loan rates, Pan Gongsheng stated today at the press conference that banks need some time for technical preparation, and will subsequently improve the commercial bank's mortgage loan mechanism, allowing both banks and customers to dynamically adjust based on market principles through autonomous negotiation.

Zhou Maohua, a macro researcher at China Everbright Bank's Financial Market Department, stated in an interview with Caixin that this move is based on respecting the spirit of market contracts. Banks and customers renegotiate existing loan interest rates through market-oriented negotiations, reasonably reducing the interest expenses for existing homeowners' mortgage payments, and promoting the faster recovery of the real estate market.