Financial Association news on October 12 (Reporter: Gao Ping) details of the adjustment of existing home loan interest rates have been released. As of the time of publication, the six major banks, industrial and commercial bank of china, agricultural bank of china, bank of china, china construction bank corporation, bank of communications, and postal savings bank of china, have all disclosed specific adjustment details today. According to the details, for eligible existing home loans, the six major banks will uniformly adjust in bulk on October 25th without requiring customer applications. Adjustments for existing fixed interest rates and benchmark interest rate loans require an application to switch to floating rates before the adjustment.

Specifically, in areas such as Peking, shanghai, and shenzhen, the first home loans with interest rates higher than LPR-30BP and all existing home loans with interest rates higher than LPR-30BP in other areas will be uniformly adjusted to LPR-30BP. Second home loan rates higher than the corresponding policy lower limit in areas such as Peking, shanghai, and shenzhen will be uniformly adjusted to the local corresponding policy lower limit.

Industry insiders told Financial Association reporters that the reduction in existing home loan rates is an important measure to reduce the cost of existing home loan rates and boost consumer confidence. It is expected to further reduce the asset-liability gap at the resident end, alleviate the trend of early repayment of loans, help stabilize the scale of bank assets, and improve consumer vitality at the residential end.

Existing home loan interest rates will be uniformly adjusted in bulk on October 25th. Eligible adjustments will be set to LPR-30BP.

According to the details, existing home loans eligible for adjustment will be uniformly adjusted in bulk on October 25th without requiring customer applications. Regarding the specific scope of this batch adjustment of loans, agricultural bank of china stated that the scope includes the first, second, and subsequent existing home loans that have been disbursed. Bank of china stated that the scope includes existing commercial individual housing loans that have been issued. China construction bank corporation stated that it involves commercial individual housing loans that were disbursed before October 25, 2024 (excluding) and contracts signed but not yet disbursed (including the first, second, and subsequent individual housing loans, and the commercial individual housing loan portion in the housing provident fund combination loan).

From the adjustment details, existing home loans eligible for adjustment will be batch adjusted to LPR-30BP. For cities that still have policy lower limits, the adjusted markup after the change will not be lower than the lower markup limit under the current interest rate policy for new home loans.

Specifically, agricultural bank of china stated that in areas where the lower limit for new home loan interest rate markup has been canceled, for existing home loans (including first, second, or subsequent homes) with markups higher than -30BP based on the loan market quote rate (LPR), the markup will be adjusted to -30BP. No adjustment will be made for loans with markups not higher than -30BP based on LPR.

In addition, in areas such as Peking, shanghai, and Shenzhen, where there is a lower limit on the new loan interest rate added to the housing loans, for existing housing loans (including first homes, second homes, etc.) with an interest rate higher than -30BP on the basis of LPR, the interest rate will be adjusted to -30BP, and not lower than the current lower limit of the new loan interest rate added to the housing loans in the respective cities. For those with an interest rate not higher than -30BP or the lower limit, no adjustment will be made.

Regarding the specific adjustment rules, industrial and commercial bank of china summarized that the interest rates for first-home loans in areas such as Peking, shanghai, and Shenzhen which are higher than LPR -30BP and all existing housing loans in other areas where the interest rate is higher than LPR -30BP will be uniformly adjusted to LPR -30BP. The interest rates for second-home loans in areas such as Peking, shanghai, and Shenzhen that are higher than the corresponding policy lower limit will be uniformly adjusted to the local corresponding policy lower limit.

Which situations are not included in this batch adjustment on October 25? China Construction Bank Corporation staff told Caijing reporters that personal commercial property loans (including mixed-use properties), housing provident fund loans; loans with an interest rate level not higher than -30BP added to the LPR; loans priced at benchmark rates or fixed rates as of October 25, 2024. Additionally, loans can be included in this batch adjustment, but for customers who do not agree to the adjustment, China Construction Bank Corporation stated that they can contact the loan processing institution by October 23, 2024 (inclusive) to submit a written application of disagreement to the adjustment.

Adjustments to existing fixed-rate and benchmark-rate loans must first apply for conversion to floating rates.

It should be noted that for this batch adjustment, existing housing loans that do not require application must be priced using a floating interest rate method, meaning that existing personal housing loans (including first homes, second homes, etc.) priced using a floating interest rate method do not require customers to apply, as banks will uniformly adjust them. However, loans with fixed rates and benchmark rates must first be converted to floating rates before adjustments are made.

Industrial and commercial bank of china has stated that for existing fixed-rate and benchmark-rate loans, customers need to apply online or offline to the bank to adjust the pricing method. After converting to LPR floating rate pricing, the interest rates will be adjusted according to the adjustment rules. Second-home loans in areas such as Peking, shanghai, and Shenzhen that meet the conditions for conversion to first-home loans can be applied for online or offline to the bank for "conversion from second-home to first-home", and after the bank confirms the eligibility, they will be converted to first-home loans, followed by interest rate adjustments according to the rules.

For the adjustment of second-home to first-home interest rates, Agricultural Bank of China stated that in areas other than Peking, shanghai, and Shenzhen where there are lower limits on the new loan interest rates added, existing housing loan interest rates do not distinguish between first homes, second homes, etc., and therefore do not need to be converted to first-home loans. For customers in areas such as Peking, shanghai, and Shenzhen who have already met the standards for converting second homes to first homes, they can submit an application through Agricultural Bank's mobile banking app or loan processing institutions.

Caijing reporters found that the specific application times vary among different banks. Industrial and commercial bank of china stated that for existing fixed-rate or benchmark-rate pricing, and for the "second-home to first-home" business, customers can apply from the date of the announcement until October 24 (inclusive) through mobile banking or loan service banks. After approval, the bank will carry out a centralized batch adjustment of loan interest rates on October 25. Starting from October 25, 2024 (inclusive), customers can continue to apply for pricing method conversions and the "second-home to first-home" conversion through mobile banking or loan service banks.

Agricultural Bank of China stated that mortgage customers who need to convert interest rate pricing can submit conversion applications before October 22, 2024 (exclusive). Those who meet the criteria for this interest rate adjustment policy will be included in the batch adjustment scope on October 25, 2024; those who submit conversion applications afterwards will promptly handle the conversion procedures after October 25, 2024.

Bank of China stated that applications completed by October 24, 2024 (inclusive) will be collectively adjusted on October 25, 2024; those completed after October 25, 2024 will undergo a centralized adjustment by the bank the day after the completion, and the new interest rate level will be effective from that day.

China Construction Bank Corporation mentioned that loans using benchmark interest rate pricing, fixed-rate loans that can be included in this batch adjustment, customers must actively apply to the bank for the 'fixed-to-floating' business before October 23, 2024 (inclusive). After converting to floating rate loans, the bank will proceed with this batch adjustment according to the rules.

Industry insiders: it will effectively reduce the cost of existing mortgage rates and boost consumer confidence.

Yan Yuejin, Deputy Director of Shanghai E-House Real Estate Research Institute, stated that reducing existing mortgage rates is more effective than lowering mortgage rates in the new housing sector, as it involves a larger scope. Overall, this is a policy benefiting the people and a significant measure to reduce the cost of existing mortgage rates and boost consumer confidence.

Regarding specific cost-saving issues, Industrial and Commercial Bank of China previously cited examples during Q&A, where in some cases, interest savings could amount to a maximum of 0.14 million yuan.

Zhifeng dai, an analyst at Zhongtai, also stated that for individuals, adjusting the existing mortgage rate helps reduce interest expense pressure and boost consumption. For banks, in the short term, it affects interest margins and performance, but in the long run, it helps stabilize scale and reduce risks.

Pan Gongsheng, Governor of the People's Bank of China, mentioned at the State Council Information Office press conference on September 24 that lowering existing mortgage rates by banks is conducive to further reducing borrowers' mortgage interest expenses. It is initially estimated to benefit 50 million households, 0.15 billion people, reducing the total family interest expenses by approximately 150 billion yuan per year. This will help promote the expansion of consumption and investment, reduce early repayment behaviors, compress the space for irregular replacement of existing mortgages, protect the legitimate rights and interests of financial consumers, and maintain the steady and healthy development of the real estate market.

Compared with the policy of lowering existing home loan interest rates in September 2023, this policy has been strengthened in terms of scope of application and reduction amplitude. In particular, the scope of application does not distinguish between first-time and second-time home buyers, making it applicable to the entire existing home loan market; the average reduction in interest rates is 50 basis points, exceeding the previous adjustments targeting point-increases due to differentiated policies by cities. Chief Economist Wen Bin of China Minsheng Bank commented on this bulk adjustment of existing home loan interest rates, stating that it is expected to further reduce the asset-liability income gap for residents, alleviate the trend of early repayment, exchange price reductions for stable volume, help stabilize the size of bank assets, and improve consumer vitality at the residential end.