① As various regions begin a new wave of inventory removal, many cities across the country have drastically lowered mortgage interest rates, frequently sending signals to the market encouraging buyers to buy homes. ② Interest rates on mortgages have been drastically adjusted in this round. Many cities have cut interest rates by 20-30 basis points, and some cities have even lowered interest rates even more.
Finance Association, May 16 (Reporter Li Jie) As various regions begin a new wave of inventory removal, many cities across the country have drastically lowered mortgage interest rates, frequently sending signals to the market encouraging buyers to buy homes.
The reporter learned from several banks in Changzhou that interest rates for the first home loan in Changzhou have dropped to 3.25%. A person from the mortgage department of a major commercial bank in Wuxi told the reporter that previously the interest rate for the first home in Changzhou was 3.45%, but recently dropped to 3.25%, down 20 bps.
A commercial bank employee told the reporter that the determination of the first home in Changzhou mainly depends on the applicant's local mortgage situation. “We only look at whether the applicant currently has an unpaid loan in Changzhou; we don't look at mortgage records in other cities; if Changzhou has previously had a loan but has now fully paid it off, it can still be executed according to the first home loan.” The staff member mentioned above said.
Meanwhile, the reporter learned from several banks in Wuxi that interest rates for the first home loan in Wuxi have dropped to 3.45%. A staff member of the mortgage department at a branch of a major bank in Wuxi said that currently the interest rate for the first home loan has dropped to 3.45%, and the interest rate for the second home loan has dropped to 4.25%.
On February 8 of this year, interest rates for the first home loan in Wuxi fell from 4.1% to 3.8%. After a lapse of nearly 3 months, interest rates for the first home loan in Wuxi fell to 3.45%, a drop of 35 bps.
Furthermore, the reporter learned that recently, second-tier cities such as Nanjing and Zhengzhou have all lowered interest rates for first home loans to 3.45%. Analysts pointed out that it can be seen that various underground mortgage interest rates have been greatly adjusted. Many cities have lowered interest rates by 20-30 basis points, and some cities have even cut even more.
“Continued efforts on the credit side can effectively reduce the mortgage burden on buyers. If the difference between mortgage interest rates (monthly capital expenditure) and rental return (monthly capital income) continues to shrink, it may become a key sign that the market is bottoming out and stabilizing.” An analyst at Guojin Securities said.
In fact, in recent times, the number of cities across the country that have lifted the lower interest rate limit for first home loans and lowered interest rates on mortgages has been increasing at an accelerated pace.
On May 15, Hefei City issued a notice announcing that it will dynamically adjust interest rates for newly issued first housing loans. The notice requires that when the sales price of newly built commercial residential housing meets the dynamic adjustment conditions of the interest rate policy for issuing the first housing unit, the lower interest rate limit for commercial personal housing loans for the first housing unit be promptly lifted in accordance with the procedures. Each financial institution can reasonably determine the specific interest rate level for each loan in accordance with the principles of marketization and rule of law, taking into account factors such as the operating conditions of the institution and customer risk conditions.
Prior to that, on May 7, according to the Hebei branch of the People's Bank of China, in order to further reduce the loan burden on buyers, enhance the vitality of the real estate market, support the demand for rigid and improved housing, and promote the stable and healthy development of the real estate market, the three municipal governments of Tangshan, Qinhuangdao, and Langfang in Hebei Province decided to phase out the lower interest rate limits for commercial personal housing loans for the first housing unit in accordance with the work requirements of the city policy.
Subsequently, on May 10, several banks in Tangshan, Qinhuangdao, and Langfang in Hebei Province announced that starting May 7, 2024, the lower interest rate limit for commercial personal housing loans for the first home will be phased out, and interest rates on first home loans will generally be lowered by 10 basis points to 3.35%.
Analysts said that since this year, there has been insufficient activity in the real estate market in many second- and third-tier cities. Lowering mortgage interest rates can better reduce the cost of buying a home for buyers and promote demand release.
According to statistics from the Central Banking Authority, as of the end of March this year, out of 343 cities (prefecture-level and above) across the country, 75 had lowered the lower interest rate limit for the first home loan, and 64 had abolished the lower interest rate limit for mortgage loans.
According to data from the central bank's “China Monetary Policy Implementation Report for the First Quarter of 2024”, interest rates on newly issued mortgages have continued to decline since the establishment of the first housing loan interest rate policy dynamic adjustment mechanism in early 2023. The interest rate for newly issued mortgages in March 2024 was 3.69%, down 45 pcts year on year and 28 pcts month on month.
“Next, eligible cities are expected to lower the lower interest rate limit for the first home loan or phase out the lower interest rate limit for the first home loan. Cities that have previously lowered the lower interest rate limit for mortgages also have room for further reduction.” Chen Wenjing, director of market research at the China Index Research Institute, said.