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China’s Mortgage Interest Rates Adjusted as Second Mortgages Become First Mortgages

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Title: Chinese Banks Begin Adjusting Mortgage Interest Rates, Providing Relief to Homeowners

Subtitle: Reduction in Existing Housing Loan Interest Rates Benefits “Second Home to First Home” Borrowers

Date: October 25, 2023

Shanghai Securities News China Securities Network News (Reporter Huang Kun) – On October 25, Chinese banks initiated the batch adjustment of “second mortgage to first mortgage” interest rates for existing mortgage loans. The adjustment is based on the new interest rate level and aims to provide relief to homeowners. Previously, the interest rates were calculated based on the original contract interest rate level.

Various banks, including Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, and China Minsheng Bank, have announced that customers who meet the conditions for converting their second mortgage to their first mortgage can transfer online or apply through offline channels starting September 25. The banks will then adjust the unified interest rate for approved businesses on October 25.

Many existing loan borrowers who qualify for the adjustment have already seen a reduction in their mortgage interest rates. One homeowner, Ms. Zhou from Shanghai, shared, “Today I saw that the App has indeed been adjusted. Before the adjustment, it was 5.25%. After the adjustment, the current execution interest rate is 4.55%. The repayment amount has been reduced, and you can eat one more hot pot every month.”

A real estate agent in Zhejiang explained that many customers have successfully applied for the adjustment of their existing mortgage interest rates at the Postal Savings Bank. “The mortgage interest rate has been reduced from 5.35% to 4.3%, which can save a lot of money in a month.”

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Responding to concerns from borrowers regarding unchanged repayment amounts in the current month’s bill despite the interest rate adjustment, China Construction Bank stated that loans are typically generated for borrowers 15 days before the repayment date, and the current repayment bill is provided accordingly. Although the current repayment amount may not have changed for customers who received bills before October 25th, the interest after October 25th has been calculated according to the new interest rate. The reduced interest due to the rate adjustment will be used to return principal, resulting in reduced installment amounts for subsequent bills.

Analysts believe that these homeowners, who were initially considered “second homes” but are now regarded as “first homes,” are significant beneficiaries of this round of real estate financial policy adjustments and optimization. Wang Xiaoqiang, chief analyst of the Zhuge Data Research Center, said, “The reduction in existing housing loan interest rates can save interest expenses for borrowers. Including the ‘second home to first home’ and fixed-rate loans within the adjustment scope expands the beneficiary groups and effectively alleviates the phenomenon of ‘early loan repayment,’ helping banks retain high-quality mortgage customers.”

In conclusion, the recent adjustment in mortgage interest rates by Chinese banks provides relief to homeowners and reduces their financial burden. This move is expected to benefit a significant number of borrowers and contribute to the stability of the real estate market.

(Note: This article is based on information sourced from Shanghai Securities News and China Securities Network. All copyrights belong to these sources and their authors. Reproduction or use of this article without written authorization is strictly prohibited.)

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