The mortgage policy has made another combination: reducing the down payment, lowering the interest rate, and revitalizing the stock

Summary

According to the current interest rate level, the national lower limit of the interest rate for the first and second home loans is 3.75% and 4.15% respectively

Tang County

Editor|Zhang Wei

The threshold for buying a home in China continues to fall.

On May 17, the People's Bank of China (hereinafter referred to as the "central bank"), together with the State Administration of Financial Supervision and Administration and other departments, issued a real estate financial policy combination to help the real estate market promote growth and stock.

The first is to optimize housing finance policies. The central bank announced the cancellation of the lower limit of the mortgage interest rate policy at the national level; The interest rate on personal housing provident fund loans will be lowered by 0.25 percentage points, and the minimum down payment ratio for housing loans will be lowered by 5 percentage points.

"It is expected that the new policy will drive the vast majority of cities to remove the lower limit of mortgage interest rates." According to industry estimates, after the policy is implemented, the mortgage interest rate in most cities may drop by 0.3 to 0.4 percentage points, and the reduction of the down payment ratio can lower the threshold for residents to buy a house, which will help boost housing consumption.

The second is to help revitalize the inventory of commercial housing. The central bank announced that it will create a 300 billion yuan re-loan for affordable housing to encourage and guide financial institutions to support local state-owned enterprises to purchase unsold commercial housing at a reasonable price for affordable housing. According to estimates, the central bank will issue reloans according to 60% of the loan principal, which can drive bank loans of 500 billion yuan.

"The central bank's adjustment of the housing loan policy this time is the implementation and timely response to the requirements of the Politburo meeting at the end of April to 'coordinate the study and digestion of stock real estate and optimize the policy measures for incremental housing'." According to market analysts, the adjustment of the down payment ratio and the lower limit of the interest rate policy will have a significant effect on incremental housing, and the new refinancing tools focus on supporting the market to digest the stock of real estate, which is the key to effectively revitalizing the stock market.

"Japan's recent struggle in tightening monetary policy is largely due to the long-term suffering from low inflation, which has been hampered by historical pains and has greatly constrained policy decision-making. If the mainland wants to reverse the expectations of the real estate market, it is necessary to take stronger measures at present. The aforementioned market source added.

1. Promote increment: the lower limit of the mortgage interest rate is cancelled, and the down payment ratio is as low as 15%

Residents who buy their first home in most cities across the country can expect a down payment of 15 percent and a mortgage interest rate lower than 3.75 percent.

On May 17, the central bank and other financial management departments issued three measures to optimize housing finance policies.

The first is to cancel the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level. On this basis, all localities can independently determine whether to set a lower limit for cities in accordance with the principle of city-specific policies.

Previously, the lower limit of the interest rate policy for the first and second housing at the national level was not lower than the corresponding term LPR (loan prime rate) minus 20 basis points and LPR plus 20 basis points, respectively. According to the current interest rate level, the national lower limit of the first and second home loan interest rates is 3.75% and 4.15% respectively.

According to public information, in December 2022, the central bank established a dynamic adjustment mechanism for the interest rate of the first home loan, according to which local governments can choose whether to cancel the lower limit of the local mortgage interest rate. As of the end of April this year, 67 of the country's 343 cities have eliminated the lower limit on the interest rate of the first home loan.

"The lower limit of the mortgage interest rate policy will be cancelled in a timely manner, and the mortgage interest rate will reflect more of the self-regulating role of the market mechanism." An industry insider said, "This policy adjustment reflects the central bank's clear thinking to promote the marketization of interest rates, and also shows the central bank's determination to continue to promote the market-oriented pricing power of financial institutions." ”

It is estimated that after the policy is implemented, the mortgage interest rate in most cities may drop by 0.3 to 0.4 percentage points, which means that the mortgage interest rate in most cities will enter the "3" era. Taking the purchase of the first house as an example, the total interest expense can be reduced by more than 70,000 yuan based on the calculation of a loan of 1 million yuan, a 30-year term, and equal principal and interest repayment. In addition, interest expenses for improved demand housing will be reduced even more.

The second is to reduce the interest rate of provident fund loans. Since May 18, the interest rate of personal housing provident fund loans has been lowered by 0.25 percentage points, and the interest rates of the first set of personal housing provident fund loans for less than 5 years (including 5 years) and more than 5 years have been adjusted to 2.35% and 2.85% respectively, and the interest rates of the second set of personal housing provident fund loans for less than 5 years (including 5 years) and more than 5 years have been adjusted to not less than 2.775% and 3.325% respectively.

The third is to reduce the down payment ratio of the first and second home loans. For households that take out loans to purchase commercial housing, the minimum down payment ratio for commercial personal housing loans for the first house is adjusted to not less than 15%, and the minimum down payment ratio for commercial personal housing loans for second houses is adjusted to not less than 25%. On this basis, the local government can independently determine the lower limit of the down payment ratio of each city in its jurisdiction in accordance with the principle of city-specific policies.

This is the second time that the central bank has recently adjusted the down payment ratio of housing loans.

In August 2023, the central bank unified the minimum down payment ratio policy at the national level to 20% for the first home and 30% for the second house. On this basis, each locality independently determines the lower limit of the policy according to the city's policies. At present, except for eight cities such as Beijing, Shanghai, Guangzhou and Shenzhen, other cities have chosen to implement the national bottom line policy of 20% and 30%.

According to the calculation of the Centaline Real Estate Research Institute, the average down payment ratio of the first home in key cities across the country was 24%. Specifically, the down payment ratio in such cities is mainly divided into two levels, namely 30% and 20%. "Most of the country is 20 percent, and a few are 30 percent." Zhang Dawei, chief analyst of Centaline Real Estate, said.

It is understood that the central bank's choice to optimize the housing finance policy at this time also has considerations to support the steady growth of credit. Recently, the financial statistics released by the central bank in April showed that the increase in the scale of social financing in April was -198.7 billion yuan, the first negative value since 2005. "The central bank has introduced an optimized housing finance policy at this time, which has the effect of continuing to stabilize financial data while boosting market confidence and improving expectations." According to market analysts.

2. Stock: 300 billion yuan of re-lending to support local acquisition of commercial housing

According to the National Bureau of Statistics, in the first four months of 2024, the sales area of newly built commercial housing nationwide was 292.52 million square meters, a year-on-year decrease of 20.2%, of which the sales area of residential buildings decreased by 23.8%. As of the end of April, the area of commercial housing for sale in the country reached 745.53 million square meters, a year-on-year increase of 15.7%. Among them, the area of residential buildings for sale increased by 24.5%.

Recently, the inventory of commercial housing has been rising, which has attracted great attention from all walks of life.

At the national video conference held on May 17 to ensure the delivery of housing, He Lifeng, member of the Political Bureau of the CPC Central Committee and vice premier of the State Council, said, "In cities with large inventory of commercial housing, the government can order and purchase some commercial housing at a reasonable price as appropriate." ”

On the same day, the central bank announced the creation of affordable housing re-lending, in accordance with the idea of "government-led, market-oriented operation", the central bank will provide low-cost re-lending funds, and encourage 21 national banking institutions to issue loans to local state-owned enterprises selected by the city government in accordance with the principle of marketization, and support the acquisition of completed and unsold commercial housing at a reasonable price for use as affordable housing.

It is reported that the refinancing amount of affordable housing is 300 billion yuan, with an interest rate of 1.75%, a term of 1 year, and can be extended 4 times. Banks issue loans in accordance with the principle of independent decision-making and assumption of risk. The central bank will issue re-loans at 60% of the loan principal, which can drive bank loans of 500 billion yuan.

According to Tao Ling, deputy governor of the central bank, the affordable housing refinancing policy includes four main points:

First, the acquisition object is strictly limited to the commercial housing that has been completed and unsold by the real estate enterprise, and the real estate enterprises under different ownership systems are treated equally.

Second, the acquisition entity shall be selected by the city government, but the selected local state-owned enterprises and their affiliated groups shall not involve the hidden debts of local governments, shall not be local government financing platforms, and shall have bank credit requirements and credit space, and shall be placed or leased quickly after the acquisition.

It is reported that the acquisition funds of local state-owned enterprises will be recovered through rental operating income and future sales income to ensure business sustainability and not increase the hidden debt of local governments.

Third, the use of the acquired commercial housing is limited to the placement or leasing of affordable housing.

Fourth, adhering to the principle of voluntary participation, local governments, real estate enterprises, acquisition entities, 21 national banks, wage earners who meet the guarantee conditions and other participating parties can decide whether to participate or not. The transaction price is negotiated by all parties on an equal footing.

Tao Ling said that the creation and implementation of affordable housing refinancing tools is conducive to achieving multiple goals: first, accelerate the destocking of existing commercial housing and promote the destocking of the commercial housing market; the second is to speed up the supply of affordable housing; The third is to help ensure the delivery of buildings and the "white list" mechanism.

"At present, a major problem faced by real estate companies is insufficient cash flow, through the support of affordable housing refinancing, after the sale of completed commercial housing, the funds can be used for the continuation of projects under construction, and after the certainty of the funds returned to the projects under construction is enhanced, there will be more projects to meet the conditions of the urban real estate financing coordination mechanism, forming a virtuous circle and improving the financial situation of real estate enterprises." An industry insider said.

"With the support of new tools, local state-owned enterprises can become new buyers of commercial housing in the market and open up the market cycle." A market expert suggested, "In the longer term, assets such as land can be used as objects for asset revitalization in the future." ”

It is worth noting that the new tool is also a continuation of the previous rental housing loan support program. In January 2023, the People's Bank of China (PBOC) set up a 100 billion yuan rental housing loan support plan, which was piloted in eight cities, including Chongqing, Jinan, Zhengzhou, Changchun, Chengdu, Fuzhou, Qingdao and Tianjin, to support the bulk purchase of housing stock to expand the supply of rental housing.

"Over the past year, the pilot has been implemented in eight cities in an orderly manner, and a commercial and sustainable rental business model has taken shape, which has played a positive role in digesting the stock of housing. Taking into account the policy convergence, we will integrate the rental housing loan support program into the affordable housing refinancing policy for management, which will be fully promoted nationwide. Tao Ling said.

(The author is a reporter from Caijing)