Today, Chinese Bank authorized the National Interbank Lending Center to announce that the quoted interest rate in the loan market on January 20, that is, the LPR, is: 3.7% for the 1-year LPR, down by 10 basis points; the LPR for more than 5 years is 4.6%, down by 5 basis points. This is the first downward revision of the LPR over a 5-year period since April 2020.
Image source: China Money Network
This is also the first time that the LPR will be announced earlier than 9:15 a.m. On the evening of the 19th, the National Interbank Lending Center was authorized to issue the loan market quotation rate quotation bank and the announcement of the release time adjustment: In order to strengthen the expected management and promote the better connection between the LPR release time and the financial market operation time, the LPR release time was adjusted from 9:30 a.m. on the 20th of each month (postponed on holidays) to 9:15 a.m.
Guan Tao, global chief economist of BOC Securities, said that the LPR interest rate was cut as scheduled, announcing that the measures for a comprehensive interest rate cut were fully implemented. This reflects the central bank's conscientious implementation of the requirements of the Central Economic Work Conference for the policy of stabilizing growth and the organic combination of cross-cycle and counter-cyclical regulation and control policies. In fact, since the second half of last year, the central government has re-proposed and improved the cross-cycle design and adjustment of macro policies, and the market has looked forward to the central bank's interest rate cuts. The interest rate cut policy has been officially implemented, responding to market concerns. It will not only help reduce the financing cost of the real economy, but also help improve the prospects for economic recovery and promote the smooth operation of the capital market. Especially in the context of the Possibility of the Federal Reserve to accelerate the introduction of monetary policy, the recent measures of the Mainland Central Bank to cut RRR and interest rates further reflect the "me-oriented" position of monetary policy.
The LPR "rate cut" is in line with market expectations
Li Yujia, principal researcher at the Guangdong Provincial Housing Policy Research Center, believes that the reduction in LPR is expected. The monetary marginal loose channel opens. Since December last year, the Central Economic Work Conference has set the tone, clarifying that "demand contraction, supply shock, and weak expectations", and after the central bank immediately cut the RRR and lowered the LPR interest rate, the market has formed a public announcement for the marginal relaxation of monetary policy. On January 17, the central bank launched a $700 billion medium-term lending facility (MLF) and a $100 billion public market reverse repurchase, both down 10 basis points, heralding an LPR cut on January 20, which is expected. Quota supply and demand mitigation. Since the fourth quarter of last year, due to the decline in sales of commercial housing, the demand for housing loans has declined, and the amount is no longer tight. At the same time, the recent increase in the amount of housing loans in large banks, the relationship between supply and demand of housing loans has been more relaxed, and the 5-year LPR has declined in a reasonable way.
The Bank of China Research Institute Liang Si believes that the LPR reduction is in line with the expectations of all walks of life, "In December 2021, the central bank has taken measures such as comprehensively reducing the statutory reserve requirement ratio and reducing the LPR interest rate, and counter-cyclical regulation has begun to exert efforts." On the 16th of this month, the 7-day reverse repurchase and 1-year MLF winning interest rates were both cut by 10 basis points, the 7-day reverse repurchase rate was a short-term policy interest rate, and the 1-year MLF interest rate was a medium-term policy interest rate, which constituted the mainland's policy interest rate system. The simultaneous downward adjustment of the two shows that counter-cyclical regulation is increasing, and also shows the determination of the central bank to help stabilize growth in the short term. This will help further guide commercial banks to reduce loan interest rates, continue to reduce the comprehensive financing costs of enterprises, help enterprises operate steadily and accelerate recovery, and effectively help stabilize growth. ”
Dong Ximiao, chief researcher of CmLCC Finance and part-time researcher of the Institute of Financial Research of Fudan University, believes that the asymmetric decline in LPR this month has positive significance in three aspects. First, it further conveys the signal of steady growth. "Confidence is more important than gold", the recent continuous adjustment of monetary policy has a superimposed effect, which will help restore market players' expectations and confidence in the future, stimulate market investment demand, and promote steady economic growth. Second, guide financial institutions to reduce the credit cost of market entities. LPR with a year of 1 and 5 years or more has both declined, and the interest rates of new short-term and medium- and long-term loans are expected to further decline, directly benefiting entity enterprises. Third, it helps to better prevent financial risks. In November and December last year, the growth rate of bank credit investment declined, and the "opening red" situation in January was not ideal, and some banks even had an "asset shortage". If credit shrinking is not reversed, the risks to the banking system will increase.
LPR for more than 5 years is lowered by 30 yuan per month for millions of mortgages
If the LPR with a maturity of more than 5 years has fallen, will the mortgage interest rate fall?
Yan Yuejin, research director of the Think Tank Center of Yiju Research Institute, analyzed the 21st Century Business Herald reporter that the central bank's interest rate cut policy will have a positive impact on the real estate market: from the perspective of housing enterprises, the cost of medium- and long-term loan funds will be further reduced, and then encourage housing enterprises to be willing to lend and dare to lend, and better activate the investment and new construction willingness of housing enterprises in 2022; from the perspective of home buyers, the cost of mortgage interest rates will be further reduced, which will further activate reasonable housing consumption demand, active transaction market, measured by 1 million stock housing loans. The monthly payment will be reduced by 30 yuan. "The activity of the supply side and the consumer side will promote the prosperity of the real estate industry and help the real estate industry to develop in a more stable direction." Yan Yuejin thinks.
"After the conversion to the LPR pricing model, everyone's mortgage will generally be adjusted once a year. As for the adjustment date, there are differences, some banks adjust on the date of signing the contract, but most of them start from January 1 of the new year. Zhang Dawei explained that if the agreed adjustment date is before the LPR decline, then the stock buyers may not change until 2023.
Looking back, Zou Linhua, head of the housing big data project team of the Chinese Academy of Social Sciences' Institute of Financial and Economic Strategy, believes that the LPR for more than 5 years in the future may have further downward adjustment.
Institutional reports show that mortgage interest rates in many cities have been cut to a certain extent. In January 2022, the mainstream first home loan interest rate and the second set interest rate of the 103 key cities monitored by the Shell Research Institute were 5.56%, and the second set of interest rates was 5.84%, both down 8 basis points from the previous month; the average lending cycle in the month was 50 days, which was 7 days shorter than the previous month.
Xu Xiaole, chief market analyst of Shell Research Institute, said that it is expected that there will be more urban mortgage interest rates cuts in the later period, and the credit environment will be more friendly, which is conducive to the release of reasonable housing demand and promote the virtuous cycle and healthy development of the real estate industry.
The property market is expected to bottom out
Li Yujia said that the downgrade conveyed a stable but not stimulating signal.
The 5-year LPR was not lowered in December, mainly because of concerns about conveying a stimulus to the market and supporting the bottom of the property market. At that time, the property market was bottoming out in October and November. However, in January, the property market data in December is poor, considering the "three stability" and "three guarantees" (to ensure the delivery of the building, to protect the people's livelihood, to ensure stability), it is urgent to reduce the loan interest rate, reduce the mortgage cost and monthly payment, encourage banks to reduce the loan interest rate, actively lend, and encourage buyers to enter the market.
The last time the 5-year LPR was lowered was in April 2020, which is also the first mortgage interest rate cut in 20 months, the biggest role is to stabilize expectations, for reducing the monthly mortgage burden, encouraging buyers to enter the market, promoting developers to collect money, ensuring housing delivery, but more importantly, its signal is of great significance. Rate cut channels or open. From January 1 to 14, the transaction area of commercial housing in 30 cities was -24.9% year-on-year, and the prosperity was still at the lowest level in the same period since 2012. If the property market continues to weaken in January, it will continue to reduce the LPR.
Judging from the data in December and January, the property market is still weak, mainly due to the credit risk of developers, the increase in the intensity of housing and housing speculation (such as property tax), credit leverage is controlled, and the land market is weak. At present, expectations have weakened, and the contraction of demand has led to the stability of the industry and financial risks, and the demand for stabilizing the property market is greater than the demand for continuing to control the property market.
Therefore, it is expected that under the role of interest rate cuts and the state once again encouraging returning to the hometown to buy a house, housing consumption during the Spring Festival, and bailing out the property market in various places, the property market in the first quarter may begin to bottom.
Yan Yuejin also believes that the central bank's interest rate cut policy will have a positive impact on the real estate market, and in summary, it will help boost the prosperity of the real estate market. First, from the perspective of housing enterprises, the cost of medium- and long-term loan funds will be further reduced, and then encourage housing enterprises to be willing to lend and dare to lend, and better activate the investment and new construction willingness of housing enterprises in 2022. Second, from the perspective of home buyers, the further reduction of the cost of mortgage interest rates will further activate reasonable housing consumption demand and activate the transaction market. The activity of the supply side and the consumption side will promote the prosperity of the real estate industry and help the real estate industry to develop in a more stable direction.
Since October last year, the financial regulatory authorities have taken many measures to stabilize the real estate market and meet the reasonable housing loan needs of individuals. Zou Lan, director of the Financial Market Department of the Central Bank of China, said at the press conference of the State Council New Office that with the joint efforts of all parties, the recent real estate sales, land purchases, financing and other behaviors have gradually returned to normal, and market expectations have steadily improved.
"In the next step, the central bank adheres to the positioning that houses are used to live, not to speculate, and in accordance with the requirements of exploring new development models, fully implement the long-term real estate mechanism, maintain the continuity, consistency and stability of real estate financial policies, steadily implement the prudent management system of real estate finance, increase the financial support for housing leasing, and promote the virtuous cycle and healthy development of the real estate industry because of the city's policies." Zou Lan said.
LPR down real estate equity debt kiqi fly
The "double drop" of LPR has greatly stimulated the strengthening of the real estate sector. In early trading this morning, the housing stocks in the Hong Kong market collectively strengthened, and the Hang Seng Mainland Real Estate Index opened higher and went higher, rising more than 6% at one point, hitting a new high in more than a month. Sunac China, Longguang Group, Shimao Group, Kaisa Group have risen by more than 10%, country garden, Times China Holdings, Zhongyuan Jianye, New Town Development and so on are all strong. The A-share real estate sector index also rose by more than 2% at one point, rising for the fourth consecutive day. Xinhualian and Huayuan Real Estate rose and stopped, and Jinke Shares, New Town Holdings, Nanshan Holdings and so on rose sharply. Financial real estate ETFs, real estate ETFs, real estate ETFs, etc. have risen in the front.
The rise in real estate bonds that have been under pressure is even more amazing, "20 Sunac 02", "21 Sunac 01", "21 Sunac 03" intraday average rose more than 20% to the stop, "19 Shimao 01" intraday highest rise of nearly 19%, "20 Yangcheng 03" rose more than 18%, "20 Rongxin 03" once rose more than 14%, "20 Yangcheng 01" rose nearly 14%, "20 Sunac 01" also rose more than 10%.
Ping An Securities believes that under the influence of various regulatory policies, the current investment and speculative demand for housing has been curbed. Historically, when the downward pressure on house prices is large and the demand for stable real estate investment is strong, it is usually accompanied by RRR cuts and interest rate cuts. Therefore, the decline in LPR above 5 years may play a positive role in saving costs and stabilizing confidence for some buyers who just need to wait and see, and help to better meet reasonable housing needs.
CITIC Securities also said that appropriately optimizing pre-sale regulatory regulations, promoting the merger and acquisition of enterprise projects with difficult funds by housing enterprises, and some measures to optimize the development environment introduced by various localities, combined with the decline in mortgage loan interest rates, are expected to promote the real estate industry boom to bottom out in March 2022. Starting from the recovery of sales, the most severe challenge facing the industry, that is, the credit problems of some large private enterprises, can also be alleviated one after another.
Source: 21st Century Business Herald (reporter Li Yuan), Securities Times (reporter Chen Ying), CCTV Finance (ID: cctvyscj), e company (author Mao Jun Peng Bo), China Securities News (reporter Peng Yang Zhao Bai Zhinan)
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