Original title: Rational view of mortgage interest rates falling
The topic of interest caused by the decline in mortgage interest rates remains high, and some voices need to be rationally distinguished. For example, it has been argued that falling mortgage rates will lead to increased demand, which in turn will push up house prices. This is a one-sided conclusion that only focuses on the demand side and does not analyze changes in the supply side. The possible impact of changes in mortgage interest rates on housing prices should be considered in combination with three factors: demand side, supply side, and price expectations.
From the demand side, the decline in mortgage interest rates will help reduce the financial cost of home buyers, which may lead to a recovery in demand. On August 22, the LPR (loan market quoted rate) for more than 5 years was reduced from 4.45% to 4.3%. Previously, the regulatory authorities have adjusted the lower limit of the first home loan interest rate to “not less than 5 years LPR minus 20 basis points”, that is to say, the current first home loan interest rate can be as low as 4.10%. Will the fall in mortgage interest rates trigger a rapid rebound in demand? the answer is negative. At present, affected by the spread of the new crown pneumonia epidemic in many places, some residents’ income fluctuates greatly and they are even unable to repay their mortgages on time. At this time, lowering the mortgage interest rate has a greater role in helping the troubled individuals to tide over the difficulties, rather than strongly stimulating market demand.
It should be noted that in addition to the demand side, the supply side has also changed, and the supply may also pick up. From January to July this year, the national real estate development investment fell by 6.4% year-on-year, of which residential investment fell by 5.8%. After the LPR of more than 5 years fell, the medium and long-term loan interest rates of real estate enterprises also fell. In the short term, this will help reduce the financing costs of housing companies, ease the tension of the capital chain of some housing companies, and create conditions for “guaranteed handover”. In the medium and long term, the reduction of financing costs can reduce the production costs of real estate companies. In addition, the regulatory authorities have repeatedly proposed “guaranteeing the reasonable financing needs of real estate”. Under the combined effect of the two, real estate investment may rebound, thereby increasing supply.
After analyzing the demand side and supply side, let’s look at price expectations. The reason why it is necessary to rationally look at the impact of falling mortgage interest rates is that it is related to price expectations, and expectations are an important variable that affects housing prices. Buyers usually form two types of expectations in the process of actual judgment, namely adaptive expectations and rational expectations. The former means that home buyers may form expectations for future housing prices based on past housing price trends; the latter means that home buyers may form expectations for future housing prices based on various information rather than just past trends. If the expectation is stable, the price will be stable and the market will be stable. At present, whether it is the reduction of mortgage interest rates or the protection of the reasonable financing needs of real estate, it is a necessary measure to stabilize expectations.
It can be seen that if price expectations are stable and both the demand side and the supply side have recovered, housing prices will remain stable. Therefore, it is not scientific to draw the conclusion that housing prices are rising directly from the decline in mortgage interest rates. The main impact of the decline in LPR with a maturity of more than 5 years is to reduce the financing cost of the real economy, boost the confidence of market players, and promote the recovery of effective demand for credit; the main effect of the decline in mortgage interest rates linked to LPR with a maturity of more than 5 years is to help homebuyers save money interest, increasing disposable income, thereby boosting consumption expectations. The two will work together to further consolidate the foundation for economic recovery and keep the economy operating within a reasonable range.
Next, all localities should adhere to the positioning of “housing, not speculating,” and, on the basis of abiding by the lower limit of the national mortgage interest rate, combined with their own actual conditions, such as regional economic development level, industrial structure, demographic characteristics, etc., implement differentiated housing credit policies according to local conditions. , to support rigid and improved housing needs, ensure reasonable financing needs for real estate, increase support for the development of the housing rental market, and promote the stable and healthy development of the real estate market. (Guo Ziyuan)
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责编：张慕琛 ]