On October 25, according to Cailian Press (Reporter: Shi Sitong), major commercial banks such as Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China adjusted the interest rates of existing housing loans in batches, uniformly lowered to LPR-30BP. It is understood that after this adjustment, the average interest rate of existing housing loans is expected to decrease by around 0.5 percentage points, saving a total of around 150 billion yuan in interest expenses, benefiting 50 million households and 0.15 billion residents.

According to industry experts, the implementation of this policy to lower interest rates for existing housing loans will have a series of positive impacts on the macroeconomy, including effectively boosting market confidence, providing strong support for consumption and investment, and helping stabilize the real estate market. Under the recent combination of various policies, there are signs of a certain bottoming out in the real estate market, and the phenomenon of early repayment by banks has also significantly reduced.

The majority of existing housing loans will be adjusted today, resulting in an overall savings of 150 billion yuan in interest expenses.

Cailian Press reporters learned from relevant commercial banks that starting from today, the majority of existing housing loans will be batch-adjusted. Borrowers can check the results of the interest rate adjustments through the designated channels of the lending banks. The completion time for some small and medium-sized banks' adjustments may be slightly later, with an overall expectation to be completed by the end of October 31.

"This is a proactive adjustment measure implemented by the relevant banks in response to the announcement of the People's Bank of China on September 29 and the initiative of the market interest rate pricing self-discipline mechanism." Experts pointed out that compared to the first adjustment in August last year, the related rules of this adjustment are clearly defined through self-discipline initiatives, further deepening the interest rate marketization reform at the institutional level, while upholding the seriousness of contracts.

It is reported that this adjustment is uniformly conducted by banks, and the vast majority of borrowers do not need to go to bank branches or actively operate online banking. The interest rate spread of existing housing loans meeting the conditions will be adjusted to -30BP based on LPR, with an average expected decrease of around 0.5 percentage points in existing housing loan rates. Overall, borrowers are expected to save 150 billion yuan in interest expenses, benefiting 50 million households and 0.15 billion people.

Cailian Press reporters found that, taking Mr. Zhang, who serves as the Deputy General Manager in a high-tech park in Beijing in 2022, as an example, in September 2022, he purchased two sets of houses with a loan interest rate of LPR+105BP. When the national unified batch adjustment of mortgage rates was made in September last year, it was lowered to LPR+55BP, and the loan rate dropped from 5.25% to 4.75%. After this adjustment, his mortgage rate will further decrease by 85BP.

"According to the calculation of the customer manager of the Industrial and Commercial Bank of China, my loan balance is 2.7 million, with a remaining loan term of 25 years. The monthly repayment amount is reduced by about 2000 yuan after the adjustment, and the total amount of interest repaid is more than 400,000 yuan lower than before the adjustment." Mr. Zhang expressed his joy, stating that this adjustment has significantly reduced his family's housing loan expenses, and the saved interest can be used to improve the quality of life and increase investment in children's education.

The phenomenon of early repayment of loans has eased, and there are signs of the real estate market bottoming out.

Experts believe that the implementation of the policy to lower mortgage rates for existing homes will have a series of positive impacts on the macro economy, including effectively boosting market confidence, strongly supporting consumption and investment, as well as helping stabilize the real estate market.

On one hand, against the background of slowing economic growth and household income, the high burden of housing loans has become a major source of pressure for many families. This policy adjustment is a positive response to the concerns of the public. At the crucial moment of the implementation of the policy to adjust existing home loan rates, the capital markets have also responded positively.

On the other hand, for specific individuals and families, the reduction in mortgage interest brings a real increase in income, which can alleviate expenditure pressure and enhance consumer confidence. For individual business owners, the lower cost of loans can provide a more ample cash flow for operations, and the saved funds are conducive to expanding the scale of operations.

For example, for a borrower purchasing a property in Peking, a 1 million yuan loan with a 25-year term at an equal principal and interest rate of 4.4%, after the rate adjustment to 3.55%, the monthly savings on the installment would be 469 yuan, totaling over 140,000 yuan in interest savings. Considering the cumulative decrease of 0.6 percentage points in the loan prime rate (LPR) for terms exceeding 5 years this year, the rate cut after the realignment of the mortgage rate with the LPR can reach 1.45 percentage points, resulting in even more interest savings.

At the same time, after the decrease in existing home loan rates, concerns about the widening gap between interest rates on new and old home loans have somewhat eased, which helps release rigid housing demand and supports the stable and healthy development of the real estate market. "Recently, the combination of real estate support policies has boosted residents' expectations of buying homes, coupled with active implementation of differentiated policies by various local governments, there are certain signs of bottoming out in the real estate market," experts said.

In fact, after the introduction of policies to lower existing home loan rates and other real estate policies, the number of viewings and transactions for new and second-hand homes in recent months has significantly increased in first-tier cities like Peking. At the same time, according to a reporter from Caijing.com, a major bank has seen a 20% reduction in early repayment of home loans since October compared to September before the policy was introduced.