On September 24, at 9 a.m., the State Council Information Office held a press conference, with Pan Gongsheng, Governor of the People's Bank of China, Li Yunze, Director of the China Banking and Insurance Regulatory Commission, and Wu Qing, Chairman of the China Securities Regulatory Commission, introducing the relevant situation of financial support for high-quality economic development, and answering questions from reporters.

Governor of the People's Bank of China, Pan Gongsheng, stated at the meeting that since the beginning of this year, the People's Bank of China has adhered to the fundamental purpose of financial services for the real economy, and has remained committed to a supportive monetary policy stance and policy orientation. The effectiveness of monetary policy is continuously evident, with financing costs at historic lows. In accordance with the central decision-making arrangements, the People's Bank of China will steadfastly maintain its supportive monetary policy stance, intensify the intensity of monetary policy regulation, and enhance the precision of monetary policy regulation. Several policies were announced:

First, reduce the reserve ratio and policy interest rates, thereby driving down the market benchmark interest rates. Pan Gongsheng announced a recent 0.5 percentage point reduction in the reserve ratio, providing the financial market with around 1 trillion yuan of long-term liquidity.

Second, lower the interest rates on existing housing loans and unify the minimum down payment ratio for mortgages.

Third, introduce new policy tools to support the development of the stock market.

Pan Gongsheng stated that the 7-day reverse repurchase rate will be reduced by 0.2 percentage points, decreasing from the current 0.7% to 0.5%. This will guide downward movements in loan market quoted interest rates and deposit rates year-on-year, maintaining the stability of commercial banks' net interest margins.

Pan Gongsheng mentioned that the existing housing loan rates will be lowered and the down payment ratio for mortgages will be unified, guiding the reduction of commercial banks' existing mortgage rates to the level of new loan rates, with an expected average drop of around 0.5 percentage points; unifying the down payment ratios for first and second home loans.

Pan Gongsheng announced the establishment of a special refinancing facility for share buybacks and shareholdings, guiding banks to provide loans to support listed companies and shareholders in share buybacks and shareholdings.

According to the data from the central bank, as of the end of the second quarter of 2024, the new national housing loan interest rate has dropped to 3.45%.

It is reported that this is the second round of cut in existing home loan interest rates. Since September 25 last year, the interest rate for existing first-time home loans has experienced a wave of cuts, reducing the borrowers' interest expenses. The People's Bank of China introduced the significant effects of the policy to lower existing home loan interest rates in a special topic in the 'China Regional Financial Operations Report (2024)' released in July this year. The report pointed out that since the implementation of the policy, over 23 trillion yuan of existing home loan interest rates have been lowered, with an average decrease of 0.73 percentage points. This results in an annual reduction of borrowers' interest expenses by approximately 170 billion yuan, playing a significant role in reducing early repayments and driving consumption growth.

However, according to statistics from the financial institutions loan direction report released by the People's Bank of China, in terms of total volume, the balance of personal housing loans in the first half of this year has decreased by 380 billion yuan. The general analysis believes that the decrease in the balance of personal housing loans comes from two reasons: first, the decline in sales of commercial housing leads to a weakening in credit demand; second, customers are repaying loans early, causing further reduction in the balance. A research report released by the gtja macro research team in July pointed out that the early repayment rate of residents in June has returned to 23.4%, down by 13.6 percentage points from the historical high of 37% in April. This indicates a slowdown in the intensity of residents' early repayments, showing a seasonal decline. However, compared to the same period in history, the current early repayment rate of residents is still at a relatively high level.

In addition, in May this year, the central bank decided to reduce the interest rate of personal housing provident fund loans by 0.25 percentage points starting from May 18, 2024. The interest rates for first-time personal housing provident fund loans of 5 years or less (inclusive of 5 years) and over 5 years have been adjusted to 2.35% and 2.85% respectively, while for second-time personal housing provident fund loans of 5 years or less (inclusive of 5 years) and over 5 years the interest rates have been adjusted to not less than 2.775% and 3.325% respectively. For newly issued provident fund loans, the 'interest rate cut' can be enjoyed starting May 18; for existing provident fund loans, the 'interest rate cut' will take effect from January 1 next year when the loan is repriced.

Affected by this, the ftse china a50 index futures rose sharply, with an increase of nearly 2%.

As of the press time, the three major stock indexes in Hong Kong opened higher, with the Hang Seng Index up 1.79% and the Hang Seng Technology Index up 2.37%.

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