Following the decision to reform and improve the LPR (Loan Prime Rate) formation mechanism on August 17, on August 25, the central bank determined that the housing loan interest rate will be benchmarked against the LPR, and the commercial housing loan interest rate will be calculated from the previous "central bank base rate + basis point" to "LPR + basis point".

After the adjustment of the "pricing" standards for personal mortgage interest rates, the impact on home buyers' loan interest rates will vary depending on the city, individual, and number of units. Although many industry insiders believe this is a neutral policy, it will still affect the quality of the "Golden Nine".

It is not simply raising or lowering commercial mortgage interest rates

On August 25, the central bank issued an announcement clarifying the latest principles of housing mortgage loan policies, which will be implemented on October 8. The key point is that the interest rate of newly issued commercial personal housing loans is linked to LPR. LPR is the loan interest rate executed by commercial banks for their best customers. Other loan interest rates can be generated by adding or subtracting points on this basis.

The announcement shows that the commercial personal housing loan interest rate is formed based on the LPR of the corresponding period in the last month as the pricing benchmark and points are added. The points added are required to comply with national and local housing credit policy requirements.

In addition, the central bank clarified the bottom line of housing loan interest rates. The interest rate of the first commercial personal housing loan shall not be lower than the LPR of the corresponding period, and the interest rate of the second commercial personal housing loan shall not be lower than the LPR of the corresponding period plus 60 basis points.

The central bank stated that the purpose of this move is to ensure the effective implementation of regional differentiated housing credit policies and maintain the basic stability of personal housing loan interest rates in the process of reforming and improving the LPR formation mechanism.

As we all know, on August 17, in order to improve the efficiency of interest rate transmission and promote the reduction of financing costs for the real economy, the central bank decided to reform and improve the LPR formation mechanism to solve the problem of the original reference to loan benchmark interest rates for quotations, which was not highly market-oriented and could not reflect changes in market interest rates in a timely manner.

Against this background, mortgage interest rates have already been expected to adjust accordingly.

On August 20, Liu Guoqiang, deputy governor of the People's Bank of China, revealed at the State Council's regular policy briefing that the People's Bank of China will issue an announcement on personal housing loan interest rate policies based on full research in the near future. The new LPR formation mechanism will not reduce mortgage interest rates. The financial industry should pay attention not to deviate from the positioning of "housing is for living, not for speculation", and at the same time, avoid turning real estate into a tool.

In this regard, Zhuge housing market researcher Jiang Guojun believes that the above-mentioned actions reflect the positioning of "housing for living, not speculation" and the principle of implementing differentiated credit policies, and at the same time send out policy guidance and market signals to further stabilize interest rates, stabilize finance, and prevent risks.

Yan Yuejin, Research Director of the Think Tank Center of E-House Research Institute, further explained that in the past, commercial housing loan interest rates were calculated based on "the central bank's base interest rate + basis points", but now it is "LPR base interest rate + basis points".

He believes that the central bank’s policy this time is not essentially to raise or lower commercial mortgage interest rates. The interest rate for mortgage loans was originally determined based on the benchmark interest rate issued by the central bank, but now it is targeting the 5-year LPR, the loan market quote rate. LPR is the loan market quotation rate formed internally by banks such as China Agricultural and Industrial Construction and other banks, which can be adjusted at any time and has commercial attributes. The central bank's benchmark interest rate will not be adjusted easily. Once it is adjusted, it will easily lead to suspicions of raising or lowering interest rates.

First home loan interest rates may be lowered in some cities

After the adjustment of personal mortgage interest rate standards, the impact on loan interest rates for home buyers has become a topic of greatest concern.

According to the new policy, if the mortgage pricing benchmark is converted, the interest rate of newly issued personal housing loans nationwide shall not be lower than the LPR of the corresponding period (based on the LPR of more than 5 years on August 20, which is 4.85%); the interest rate of the second personal housing loan shall not be lower than the LPR of the corresponding period plus 60 basis points (based on the LPR of more than 5 years on August 20, which is 5.45%).

In contrast, Zhang Dawei, chief analyst of Centaline Real Estate, analyzed that according to the current mortgage data, most banks implement an increase of 10%-20% for first-home loans and a 20%-30% increase for second-home loans. This is in line with the new policy requirements, so for the current market, the policy will not lead to an increase in interest rates.

The relevant person in charge of the People's Bank of China also emphasized when answering reporters' questions that compared with before the reform, when households apply for personal housing loans, interest payments are basically unaffected.

In the view of many people in the industry, it is expected that the mortgage interest rate will be linked to the LPR interest rate. This is a neutral policy.

However, the impact on different cities is also different. Under the unified bottom line, the central bank requires provincial-level branches to determine the lower limit for interest rates on first and second commercial personal housing loans within their jurisdiction.

From the above statement, the intention of "implementing policies according to the city" is obvious. "Moderately relaxing the policy space for various localities to determine the lower limit of mortgage interest rate increases can better regulate according to market conditions and avoid one-size-fits-all." Jiang Guojun said.

Yan Yuejin also believes that considering the recent tightening of real estate loans, the interest rate after "LPR base interest rate + basis point" will be increased. However, due to the impact of city-specific policies, the possibility of interest rate reductions in individual cities cannot be ruled out.

According to Zhang Dawei, the interest rates for first-time home buyers in different cities in China vary greatly, with the lowest in Shanghai being only 95% off, while the interest rates in many cities are 5.4-6.0. Judging from the current real estate market, first-time mortgage interest rates are too high. Judging from policy expectations, there is a possibility of lowering them in the future.

Take Shanghai as an example. Previously, the first-home mortgage loan interest rate could be given to the best customers at a 10% discount (4.41%), and high-quality customers could generally be given a 9.5% discount (4.655%). According to the formulation of the new policy, Shanghai’s first-home mortgage loan interest rate is expected to increase to 4.85%. The interest rate for first-time home loans in Beijing is generally 10% higher than the benchmark interest rate, reaching 5.39%. Judging from the expectation of encouraging first-time home buyers, this means that it may be lowered after the New Deal.

Second-home mortgage interest rates are expected to rise, is the "Golden Nine" no more?

Judging from the content of the above-mentioned new adjustments, it continues the logic of the old policy that the floating ratio of second-home loans is greater than that of first-home loans. There will be no loan interest rate pressure on first-time home purchases that meet basic owner-occupancy needs, while certain credit restrictions will be imposed on the purchase of second homes. Jiang Guojun believes that this will help prevent the property market from overheating.

In addition, the policy stipulates that the interest rate increase standard for commercial housing purchase loans is the same as that for second home loans, which is an increase of 60 basis points. This reflects the orientation of the mortgage interest rate policy to give priority to first-time homes and to tighten restrictions on second-home properties and commercial properties.

Tongce Consulting Research Director Zhang Hongwei also believes that the direct control effect of mortgage interest rates is more obvious. The mortgage interest rates for home buyers who just need a house and those who buy multiple houses may diverge, which may be good for those who just need a first house.

It is worth noting that in addition to the five-year LPR interest rate changes affecting mortgage interest rates, Jiang Guojun said that the central bank's mortgage interest rate pricing rules also mentioned "customer risk status, credit conditions, reasonable determination of each loanExpressions such as "specific points added value" indicate that differentiated mortgage interest rate policies not only vary by region and number of units, but may also vary from person to person in the future. For example, the quality of an individual's credit record will also have a certain impact on the level of his or her mortgage interest rate.

In some industry insiders It seems that changes in interest rate adjustments may also have a certain inhibitory effect on market sales.

Yuan Chengjian, vice president of Zhuge Housing, predicts that the national mortgage interest rates will not only not decrease in the future, but will show an overall upward trend, especially the interest rates on second homes, which will have a negative impact on real estate market sales. It will have a certain inhibitory effect.

At the same time, Jiang Guojun also believes that due to the strict second-home loan policy, the points added by commercial banks in various places will also be higher than 60 basis points. Therefore, there will be no "water release" phenomenon.

From a time point of view, September is a new year. During the market brewing period before the implementation of the mortgage interest rate policy, commercial banks have not yet announced the specific point value. Home buyers will have intensified differences in their expectations for interest rate changes, and the wait-and-see mood will also intensify. For this reason, Jiang Guojun believes that the "Golden Nine" market will no longer exist in the property market this year.