(Original title: Hot list! Repaying 200,000 yuan in advance will save 170,000 yuan in interest? The queuing time in Shanghai is shortened, and it still takes 20 days at the fastest)
The hottest topic right now is “mortgage repayment in advance”.
On the morning of February 15th, the topic “Repaying 200,000 yuan in advance or saving 170,000 yuan in interest” became a hot topic on Weibo. Recently, against the background of expected decline in mortgage interest rates, delays in the update of existing mortgage interest rates, and continuous decline in wealth management interest rates, home buyers are more willing to repay their loans in advance, and “early repayment” has been a hot topic on major social platforms for many consecutive days. At the same time, the above-mentioned news also topped the hot list every time, triggering heated discussions among netizens.
According to media reports, assuming you bought your first home in October 2018, the national average interest rate for first home loans in that month was at a stage high of 5.71%. Assuming that you repay a commercial loan of 1 million yuan with equal principal and interest and a fixed interest rate of 5.71% (just to explain the problem briefly), the loan period is 30 years, and the first repayment is in October 2018, then: the monthly repayment amount is 5810.34 yuan, The total amount of interest repayable is 1.0917 million. Now you plan to repay the loan of 200,000 yuan in advance in February 2023 (the remaining loan part: still use the same amount of principal and interest, the interest rate has not changed, and the repayment period has not changed), then the monthly repayment amount will be 4555.07 yuan, compared to not repaying in advance savings, saving 175,300 yuan in interest.
The queuing time for “early loan repayment” has been shortened
It is reported that in the Shanghai area, the queuing time for “early repayment” of major banks has been shortened to a certain extent, but it still takes 20 days at the fastest. According to a Shanghai Securities News report on the 15th, according to the reporter’s research in recent days, in the Shanghai area, the queue time for “early repayment” of major banks has been shortened, and the phenomenon of prevarication and delay reported by repayers has improved to a certain extent. “Today (referring to February 14th) there is still a quota for the appointment, and the loan can be repaid in advance as early as March 6th.” The personal loan manager of a branch of China Construction Bank in Shanghai told reporters.
The situation of Shanghai branches of other big banks is similar. The personal loan manager of a branch of the Bank of Communications in Shanghai told reporters that there are a lot of people who have recently applied for early repayment, but the channels are unimpeded. At present, to repay part of the mortgage in advance, you need to make an appointment one month in advance; if you need to settle the mortgage, you need to make an appointment at least one and a half months in advance.
The waiting time of at least one month still reflects the pressure that banks are facing from lenders to concentrate on repaying loans. “Because there are too many people repaying the loan in advance, in fact, customers still need about 3 months to process the repayment in advance.” A business person from a branch of the Agricultural Bank of China in Shanghai told reporters.
How to solve “early loan repayment”?
So, how to solve “early loan repayment”? In this regard, some people in the industry suggest that home buyers should be guided in asset allocation and at the same time look for new high-quality credit resources. “Banks should fully predict the situation, leave space for themselves to ensure normal operation and management, and actively introduce more stable wealth management products to attract customers, find new high-quality credit resources, make full use of the large amount of recovered funds, and ensure profits. “Li Wanfu, Rong 360 Digital Technology Research Institute, told reporters.
While this wave of early repayment is intensifying, calls for lowering interest rates on existing mortgages are also growing. According to a report by Securities Daily on the 14th, Dong Ximiao, chief researcher of China Merchants Union Finance and a part-time researcher at Fudan University’s Financial Research Institute, said in an interview with reporters that moderately reducing the interest rate of existing mortgages will help reduce the burden of residents’ housing consumption and reduce residents’ early repayment behavior. Promote the healthy and stable development of the real estate market, and boost residents’ willingness and ability to expand consumption.
“Currently, stock housing loans are faced with the contradiction between banks maintaining income and home buyers wanting to reduce expenditures. Banks lack sufficient motivation to lower the interest rate of stock loans. The interest rate of existing mortgages will gradually narrow the interest rate difference between existing mortgages and new mortgages, which may help alleviate the phenomenon of early repayment.” Chen Jingwen, director of market research at the Index Division of the China Index Research Institute, told reporters.
A number of people in the industry and experts told reporters that more people choose to repay early in order to lower interest rates. In this regard, some experts suggested: reduce the interest rate of stock loans or allow home buyers to convert fixed interest rates to floating interest rates.
According to China Youth Daily, “As long as the mortgage interest rate is higher than the wealth management interest rate, as long as the house price is still falling, and residents expect the house price to fall, the motivation to repay the loan in advance will always exist.” Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, predicts, In the future, more cities will abolish the lower limit of mortgage interest rates, especially in cities where housing prices have fallen. On the one hand, it is to reduce the inversion between the mortgage interest rate and the wealth management interest rate; on the other hand, it is to reduce the mortgage interest rate to buffer the decline in housing prices. At the same time, the recent property market policy has shifted more to demand-side bailouts, with the purpose of encouraging people to buy houses and alleviating the expectation of falling house prices.
Zhao Xiuchi, a professor at the Capital University of Economics and Business and vice president and secretary-general of the Beijing Real Estate Law Society, suggested that from a national policy perspective, home buyers who originally chose fixed interest rates for stock loans should be allowed to switch to floating interest rates based on LPR.
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