How much less can LPR double-down mortgage repayments be? The first cut in 21 months in 5 years is conducive to boosting the property market and easing market wait-and-see sentiment
Peninsula All Media reporter Yu Hongliang
On January 20, the People’s Bank of China authorized the National Interbank Funding Center to announce that on January 20, 2022, the loan market quoted interest rate (LPR) is: 1-year LPR is 3.7%, and LPR for more than 5 years is 4.6%. Among them, the LPR with a maturity of more than 5 years linked to housing loans was cut by 5 basis points this time. What is the impact of this reduction on the “mortgage family”? The reporter learned that the adjustment of LPR for more than 5 years will not affect all people who repay mortgages, which is related to the way individuals choose mortgage interest rates. Many homebuyers with loans said they were very happy, and they also expressed their intention to buy a house as “a drop in the bucket”, but the loose credit environment is conducive to boosting the property market, easing the wait-and-see mood of the market, and reducing corporate financing costs.
5-year 21-month first cut
Published earlier
According to the LPR data released on January 20, the 1-year LPR was 3.7%, a decrease of 10 basis points from the previous period; the LPR for more than 5 years was 4.60%, a decrease of 5 basis points. The reporter combed and found that the last time the LPR for a period of more than 5 years fell was April 2020, 21 months have passed since then.
In the LPR data released in December 2021, the central bank only lowered the 1-year LPR, and the 5-year period remained unchanged. This LPR double decline, it is worth noting that the 1-year LPR has a relatively larger decline, while the 5-year LPR linked to housing loans has a relatively conservative decline.
In addition to the lowering of both LPRs, there is another point worth paying attention to. The release time of the LPR data this time has been brought forward. The central bank adjusted the LPR release time from 9:30 a.m. on the 20th of each month to 9:15 a.m. In this regard, the central bank stated that it is to strengthen expectation management and promote a better connection between the release time of LPR and the operation time of the financial market. As we all know, the opening time of the stock market is 9:30 am from Monday to Friday, and the call auction time for A shares starts at 9:15 on each trading day. The advance of the LPR announcement time is conducive to providing reference and decision-making for the financial market. in accordance with.
Mortgage rates fall
will not take effect immediately
According to the policy, the adjustment of the LPR for a period of more than 5 years will not affect all those who repay the mortgage. This is related to the way individuals choose the mortgage interest rate. If a fixed interest rate is selected, this adjustment will not affect the change of the mortgage; if a floating interest rate is selected, it will cause changes in the monthly payment in the later period. In 2019, the central bank announced the implementation of a new policy on housing loan interest rates. The newly issued commercial personal housing loan interest rates are formed by adding points to the loan market quoted rate (LPR) of the corresponding term in the last month.
Also, the drop in mortgage rates won’t take effect immediately. Although the LPR is updated monthly, according to the bank mortgage contract, the interest rate for mortgage customers will not change every month. The reporter learned that at present, different banks in the market have different regulations on the repricing cycle:
In most cases, banks will reprice according to the LPR at that time on January 1 each year, and the monthly payment of those who choose floating interest rates will change in January each year. However, the adjustment of the LPR for a period of more than 5 years will not immediately affect the changes in the monthly payment of these people. The mortgage interest rate will not be determined according to the latest quotation until January 1 of the following year. In addition, some banks also stipulate that the personal mortgage contract expires 12 months after the re-pricing. For example, if a customer signs a mortgage contract on October 20, 2021, the mortgage interest rate they enjoy is LPR plus basis points, and the bank will not re-determine the mortgage interest rate enjoyed by the customer until October 20, 2022; If the contract is signed on February 1, the bank will re-determine the customer’s mortgage interest rate according to the latest LPR quotation on February 1.
Mortgage interest rates to be adjusted
Some banks have lowered
What will happen to the mortgage interest rate when the LPR for a period of more than 5 years is adjusted? It is understood that in terms of mortgage interest rates in various cities, some cities, including Guangzhou, Shenzhen, Suzhou, etc., have recently seen the phenomenon of some banks lowering the mortgage interest rate. LPR After the downward adjustment, Zhuge Housing Data Research Center estimates that the first-tier cities are between 5% and 5.5%, and the third- and fourth-tier cities are around 4%.
The reporter learned that before that, some joint-stock banks in Qingqing had lowered the mortgage interest rate, the interest rate of the first house was 5.35%, and the interest rate of the second house was 5.65%. However, the mortgage interest rate of many banks remained at 5.45% for the first house and 5.7% for the second house. After the 5-year LPR decline, many banks’ mortgage interest rates have to be adjusted, and there is no clear news.
According to industry analysis, the housing loan interest rate cut this time is good for the property market, and it is not ruled out that hot cities will usher in a small spring and take the lead in recovering. Secondly, according to historical experience, interest rates and housing prices are inversely related, and the decline in interest rates will drive up housing prices. It is expected that housing prices in hot cities will also show a slight rise.
Ease the wait-and-see mood
boost confidence in the property market
Zhuge Housing Data Research Center believes that this LPR reduction is of great significance for reducing corporate financing costs and promoting the steady development of the real economy. Among them, the 5-year LPR reduction has a greater impact on the real estate market and is more urgent.
Since the second half of 2021, the real estate market has continued to be sluggish, and the industry has even bottomed out. This rate cut can be said to be a major positive for the real estate market. Although there are only 5 BP cuts, it plays an important role in boosting market confidence. For homebuyers, the reduction of the 5-year LPR linked to housing loans means that the amount of mortgage repayments will be reduced, which will reduce the cost of home purchases to a certain extent, which will help ease the wait-and-see sentiment of the market and better meet the reasonable demand for home purchases. For real estate enterprises, the reduction of LPR means that the financing cost of enterprises is reduced, which is conducive to alleviating the debt pressure of some enterprises, reducing liquidity risks, and promoting the normal operation of enterprises.
■Easy to investigate the credit environment is conducive to rapid lending
How much money can home buyers pay for the reduction of LPR for more than 5 years this time? Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, made a specific calculation. Taking a loan as an example, before the interest rate adjustment, the LPR was 4.65%, and the monthly payment was 5,156 yuan. After the interest rate adjustment, the LPR was 4.60%, and the monthly payment was 5,126 yuan. Calculated in this way, the monthly payment It has decreased by about 30 yuan. If commercial banks have more abundant loanable funds in the future and there is room for further reduction in interest rates, the similar burden reduction effect will be more obvious.”
On the 20th, a reporter from the Peninsula All Media interviewed a number of mortgage buyers. “I am very happy to hear that the LPR has been lowered for more than 5 years. After all, it has not been adjusted for a long time.” Mr. Liu took out a loan to buy a house in 2016, and now there are 600,000 commercial loans that have not been repaid. This interest rate adjustment means that he can It is a little less, but because he chooses to reprice on January 1 every year on the floating interest rate, this adjustment means that he will not be able to enjoy this dividend this year. Another home buyer with a loan chose to use the “actual lending date” to determine the mortgage interest rate when re-pricing. At that time, the bank lending date for her loan was April 10. Assuming that the LPR for more than 5 years will not change after that, she will be 5 years old this year. You can pay less in monthly repayments.
The reduction of the LPR for a period of more than 5 years this time is quite encouraging for many repayers who are currently carrying loans, but it seems to have little impact on many home buyers. “It’s mainly because I’m confused about the current market, and I don’t know if it’s a good time to buy a house.” A netizen of the Peninsula Housing Club said that he had just started working, and he had some savings in his hand, and with the sponsorship of his parents, he could make up 600,000 yuan. Leveraging some housing in the main urban area, but thinking of the current property market environment and the pressure on mortgages to be undertaken in the future, I feel very uncertain. “It’s mainly due to the pressure of repayment, but it’s definitely a good thing to have a lower mortgage interest rate.” Mr. Wang, another buyer who just needed a house, said that he has been browsing housing listings recently, and the reduction in LPR has inspired him a lot. In 30 years, the overall calculation can save a lot of money.”
For some homebuyers who are anxious to buy a house and are going through loan-related procedures, the looser credit environment is also conducive to banks’ quick lending. “Recently, the loan time has obviously accelerated. The clients I deal with can be approved in less than half a month.” Ms. Ma, who works in a real estate agency in Li Cang, told reporters that from the application to the approval of the loan, different customers are different because of the information. The reason for whether it is complete or not, the processing time is different, but if the information is complete, the operation will be very fast now. “Some time ago, it sometimes took two or three months. If it was slow, it would take half a year, mainly because it was difficult to approve at that time.” Ms. Ma said. According to the statistics of Shell Search, from the time of signing in at the bank to completing the materials and then to the bank’s approval, the average time limit for transactions completed by the Shell Contracting Service Center is about 10 days. From the time when the bank gets the mortgage certificate to the time when the owner receives the house payment, the time limit is about 9 days.
