The real estate market has received major news again, and many banks have successively answered questions and adjusted the interest rates for existing housing loans.

On October 10, industrial and commercial bank, bank of communications, cm bank, shanghai pudong development bank, china zheshang bank, industrial bank, and many other banks issued a FAQ and announcement on the adjustment of interest rates for existing housing loans.

For those with mortgage rates higher than LPR-30BP, they will be uniformly adjusted to LPR-30BP.

Among them, industrial and commercial bank took the lead in announcing the unified adjustment on October 25, becoming the first bank to clearly specify the downward schedule.

Other banks also stated that they plan to complete the adjustment by October 31.

Who can participate in the adjustment?

Currently, the LPR is 3.85% and will be 3.55% after the unified adjustment.

Industrial and Commercial Bank of China recently stated that on October 25, 2024, the interest rates of existing housing loans meeting the corresponding conditions will be uniformly adjusted in batches to no less than 30 basis points below the Loan Prime Rate (LPR).

Both first-time and second-time commercial individual housing loans meeting the conditions can be batch adjusted.

Except for Peking, Shanghai, and Shenzhen, the minimum interest rates for first-time and second-time housing loans in other areas are the same, so there is no need to apply for conversion from second-time to first-time. Banks will batch adjust the interest rates to LPR-30.

If in Peking/Shanghai/Shenzhen and already meet the criteria for converting from second-time to first-time housing loans, you can contact the loan handling bank to apply for the conversion. Upon approval, you can enjoy a more favorable first-time housing loan interest rate.

If the loan is in Peking/Shanghai/Shenzhen and does not meet the criteria for converting from second-time to first-time, according to the current lower limit of second-time housing loan policy, the adjusted interest rates will be: LPR-25 basis points outside the Fifth Ring Road in Peking, LPR-5 basis points within the Fifth Ring Road; in Shanghai Free Trade Zone, Lingang New Area and Jiading, Qingpu, Songjiang, Fengxian, Baoshan, Jinshan districts LPR-25 basis points, LPR-5 basis points in other areas; in Shenzhen LPR-5 basis points.

If the housing loan interest rate is equal to or lower than LPR-30 basis points, it will not participate in this adjustment.

In addition, this adjustment of existing housing loan interest rates only applies to commercial individual housing loans. Loans for commercial properties (including mixed-use properties and shops) are not included in this adjustment.

The housing provident fund loans and the housing provident fund portion in combination loans are also not within the scope of this adjustment.

For commercial individual housing loans in combination loans, the interest rate level can be adjusted separately or new loans can be issued for substitution, and new loans can only be used to replace commercial individual housing loans in the combination loans.

How much money can be saved on monthly mortgage payments after the adjustment?

After lowering the mortgage interest rate, how much money can be saved in a month? In a recent Q&A, industrial and commercial bank of china mentioned two cases:

Case 1: Xiao Zhang has a property in a certain second-tier city, with the current mortgage rate at LPR without an additional point, i.e., 3.85%. After the adjustment, the mortgage rate is LPR-30BP. Assuming LPR remains unchanged at 3.85% for 5 years or more, the post-adjustment rate is 3.55% (=3.85% - 0.3%). The rate decreases by 30BP, i.e., 0.3%. Using a loan amount of 1 million yuan, a 30-year period, and equal principal and interest repayment as an example, the monthly repayment before the adjustment is about 4688 yuan, and after the adjustment it is about 4518 yuan. Xiao Zhang can save approximately 170 yuan per month in expenditures, with a total interest savings of approximately 0.061 million yuan.

Case 2: Xiao Li has a property in a certain first-tier city, with the current mortgage rate at LPR+55BP (first home mortgage rate policy at the time of loan issuance), i.e., 4.4%. After the adjustment, the mortgage rate is LPR-30BP. Assuming LPR remains unchanged at 3.85% for 5 years or more, the post-adjustment rate is 3.55% (=3.85% - 0.3%). The rate decreases by 85BP, i.e., 0.85%. Using a loan amount of 1 million yuan, a 25-year period, and equal principal and interest repayment as an example, the monthly repayment before the adjustment is about 5502 yuan, and after the adjustment it is about 5033 yuan. Xiao Li can save approximately 469 yuan per month in expenditures, with a total interest savings of approximately 0.1406 million yuan.

It is important to note that the reduction in the housing loan for each borrower depends on various factors such as their current loan execution rate, the lower limit of the new lending mortgage rate policy currently implemented in the city, and many other factors.

Industrial and commercial bank of china stated that currently, except for Beijing, Shanghai, Shenzhen, and other areas where the second home mortgage policy is implemented, existing housing loans in most areas can be adjusted to not less than LPR-30BP, and most higher interest commercial individual housing loans are within the adjustment range.

On September 29th, the People's Bank of China issued a notice and guided the market interest rate pricing self-discipline mechanism initiative: all commercial banks should generally uniformly implement batch adjustments to existing housing loans (including first homes, second homes, and above) by October 31, 2024.

Subsequently, many banks including CM Bank, Shanghai Pudong Development Bank, and Industrial Bank have successively issued FAQs on adjusting existing housing loan rates adjustment.

and plan to release specific operational details on October 12, 2024, to complete the bulk adjustment of existing housing loan rates before October 31, 2024.