After the LPR unexpectedly dropped by 25 basis points, some cities have increased the additional basis points on top of the LPR. Today, reporters from Caijing Network learned from several banks in cities in Jiangsu Province, such as Nanjing and Suzhou, that the region will increase the additional basis points from the original LPR-90 basis points to LPR-65 basis points, maintaining a minimum lending rate of 2.95% for first-home buyers, impacting many new home buyers receiving loans affected by this policy.

Industry experts told Caijing Network reporters that there have been cases where despite the decrease in LPR, some banks have raised basis points. However, they suggest that regions should continue to move towards a direction of sustained easing, especially considering the recent high enthusiasm in home buying, to continue promoting innovation in the trading market.

"Although the LPR has been lowered, the basis points have slightly increased, indicating that in terms of lowering mortgage rates, various regions have actually reached a bottom. The banks' reverse operations offset the effect of interest rate cuts. For home buyers, it is important to pay attention to the changes in such signals and realize that some credit policies may be reaching a bottom" experts stated.

Multiple places in Jiangsu implement the lower limit of first-home mortgage rate with the reduction in LPR basis points.

"The instructions received here are that the first-home mortgage rate must not be lower than 2.95%." A client manager at a commercial bank in Nanjing told Caijing Network reporters today that even for loans applied before the LPR adjustment, the final rate is based on the loan disbursement date.

According to the latest LPR announced yesterday: 1-year and 5-year and above LPRs both decreased by 25 basis points, to 3.1% and 3.6% respectively. Previously, the policy for first-home mortgage rates in the Nanjing area was based on LPR-90 basis points, with the rate before the LPR adjustment yesterday at 2.95%. Therefore, with the LPR decrease, the latest first-home mortgage rate should also decrease by 25 bp to 2.7%. However, today, various banks in the Nanjing area stated that despite the LPR decrease, the additional basis points are reduced and the lowest rate remains at 2.95%, not exceeding this limit.

"The loans that were previously issued could be reduced by 90 basis points because the previous LPR was high. Even though the LPR has now decreased, it cannot go below 2.95%, so the new policy being implemented is LPR-65 basis points, and this will also be stipulated in the contracts." A client manager at a city commercial bank in Nanjing mentioned that even though there is no lower limit on interest rates in the Nanjing area, all banks will effectively follow the new 2.95% standard.

Several borrowers in Nanjing also reported receiving notifications from banks about an increase in BP. "I signed the loan contract two weeks ago, but the loan has not been disbursed yet. Previously, they said the interest rate was LPR-90bp. However, they called me yesterday to inform that the new loan issuance rate has been changed to LPR-65bp. I am currently in negotiations with the bank," said Wu Bai (pseudonym), a home buyer in Nanjing, to a Caixin reporter.

In addition, banks in other areas of Jiangsu Province confirmed to reporters that they received notifications from the banking regulatory commission before the LPR cut yesterday, stating that the interest rate for first home loans should not be lower than 2.95%. "Indeed, we received the notification last week, requiring that the interest rate for first home loans should not be lower than 2.95%. This interest rate is not determined by the bank itself, but is unified by regulation," said a customer manager at a city commercial bank in Suzhou to a Caixin reporter.

Banks' reverse operations have led to a reduction in the interest rate cut effect.

"Currently, it is observed that in Nanjing, Suzhou, and other areas, there is a reverse operation, where although the LPR has been decreased, the basis points have been slightly increased, from -90BP to -60BP. This indicates that various regions have already reached a certain bottom in terms of lowering mortgage rates. This is also related to the recent resurgence in the real estate transaction market," pointed out Yan Yuejin, Deputy Director of the E-House Research Institute in Shanghai, to a Caixin reporter.

Previously, the industry had calculated that a 25 basis points decrease in the LPR would bring benefits to borrowers. Calculated based on a 1 million loan principal, 30-year period with equal principal and interest payments, the monthly installment would decrease by over 130 yuan, and the total interest would decrease by approximately 480,000 yuan. However, if banks raise the floating basis points, the discount on the preferential rate will be reduced.

"Due to the increased activity in bank loans recently, there has not been a corresponding frequency of rate cuts. Instead, the effect of the interest rate cut has been diluted through reverse operations. For homebuyers, it is important to pay attention to changes in such signals and recognize that some credit policies may show signs of bottoming out," said Yan Yuejin.

It is worth noting that in the past, Nanjing and other areas have experienced instances where the LPR decreased but some banks raised basis points. Yan Yuejin suggested that regions should continue to move towards a direction of sustained easing, especially considering the high enthusiasm in recent homebuying situations, to continuously promote record-high levels in the transaction market.