The 5-year LPR has hit the largest reduction, and the 30-year mortgage of 1 million yuan will be repaid by 52,000 yuan

Highlight the point

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  Today, the LPR for more than 5 years fell by 25 basis points, the largest reduction on record, and the rate of first home loans will also fall to a record low after the rate cut.

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  If calculated based on the commercial loan amount of 1 million yuan, the loan for 30 years, and equal principal and interest repayment, the LPR will decrease by 25 basis points, the monthly payment will be reduced by 144.8 yuan, and the cumulative monthly payment for 30 years will be reduced by 52,000 yuan.

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  For homebuyers, it may not be until 2025 for existing homebuyers to start reducing interest. After the interest rate of existing mortgages is converted into the LPR pricing model, it will generally be adjusted once a year, and most banks will start to adjust it in January of the new year.

Finance Associated Press, February 20 (Reporter Li Jie) The central bank lowered the loan benchmark interest rate LPR again after eight months.

On February 20, the latest loan prime rate (LPR) was released, with the five-year LPR lowered to 3.95% from 4.20% previously, and the one-year LPR remained at 3.45%.

It is worth noting that this adjustment is an asymmetric rate cut, with the five-year LPR reduced by 25 basis points, while the one-year LPR has not been adjusted.

Interviewed industry experts told reporters that the LPR was already at the lowest level in history before the interest rate cut, and the 5-year LPR was lowered again, and the interest rate on the first home loan in the country will be reduced by 25 basis points on the basis of the "historical low", which is unprecedented.

"For the real estate market, the reduction of the medium and long-term LPR benchmark interest rate will help reduce the pressure on residents to purchase real estate and repay existing housing loans. Ma Hong, a researcher at the Guangkai Chief Industry Research Institute, said that the follow-up commercial bank mortgage interest rates will also respond to the reduction, and the loan concessions are more significant, which will promote the increase in incremental housing purchases and other consumption areas, and the decline in commercial housing sales is expected to narrow during the year.

If calculated based on the commercial loan amount of 1 million yuan, the loan for 30 years, and equal principal and interest repayment, the LPR will decrease by 25 basis points, the monthly payment will be reduced by 144.8 yuan, and the cumulative monthly payment for 30 years will be reduced by 52,000 yuan.

Zhang Dawei of Centaline Real Estate: The largest interest rate cut in LPR history is one of the biggest positives for the property market in recent years

Zhang Dawei, chief analyst of Centaline Real Estate, said that at present, most people's housing loans are priced in LPR, and the mortgage interest rate will fluctuate with the fluctuation of the market loan interest rate.

The impact of the 5-year interest rate cut on the real estate market is mainly in the following points: first of all, if the goal of the interest rate cut in the past is to stabilize the economy, this time the interest rate cut alone for 5 years is to stabilize the property market, and the property market can better stabilize the economy. In the past, asymmetric interest rate cuts were only for one year, but this time it is only for five years, which can be said to be the biggest positive for the property market in recent years.

Secondly, this rate cut mainly affects first- and second-tier cities. Before this rate cut, the interest rate on the first home in the third and fourth tier cities was generally around 3.6-3.7%, and only a few first- and second-tier cities still maintained high mortgage interest rates, so this policy mainly affected the first and second tier cities.

For homebuyers, it may not be until 2025 for existing homebuyers to start reducing interest. After the interest rate of existing mortgages is converted into the LPR pricing model, it will generally be adjusted once a year, and most banks will start to adjust it in January of the new year. This means that existing mortgages may not be available until 2025, and if you are a new homebuyer, you will soon enjoy the benefit of interest rate cuts.

Cutting interest rates is good for keeping real estate expectations stable. At the time of the interest rate cut, the real estate market is expected to have a more obvious Xiaoyangchun market after the first-tier cities fully adjust the purchase restrictions.

Yang Chang of Zhongtai Securities: The reduction of LPR is part of the policy combination on the demand side of the real estate market

Yang Chang, chief analyst of the policy group of Zhongtai Securities Research Institute, believes that from the perspective of the LPR formation mechanism, the LPR is summarized by 18 quotation banks according to the MLF interest rate, and a maximum quotation and a minimum quotation are removed, and the weighted average calculation of the data forms a quotation. Generally speaking, symmetrical adjustments to the 1-year and 5-year LPRs are the norm, but asymmetric adjustments are not uncommon.

This asymmetric downward revision reflects at least three intentions:

First, monetary policy is also cooperating with the steady start of the economy, after the Spring Festival holiday, from the supply side of funds, by reducing loan interest, reducing financing costs, with the intention of a stable start to the economy in 2024 is more obvious.

Second, the asymmetric reduction of interest rates of different maturities indicates that the policy hopes to play a role in the object of focus, keeping the 1-year LPR unchanged, or indicating that the stimulus intention for manufacturing investment and consumption is relatively stable.

Third, due to the relatively strong correlation between the 5-year LPR and the real estate market, from the previous point of view, the reduction of the 5-year LPR interest rate is also part of the real estate market demand-side policy combination, at this stage, the 5-year LPR interest rate has been significantly reduced by 25 bp, combined with the recent intensive introduction of more policy measures around the real estate market, which fully reflects the policy intention of the interest rate policy to participate in activating the real estate market and promoting the virtuous cycle of the real estate market.

Yan Yuejin of E-House Research Institute: The largest interest rate cut in history will help promote mortgage application and consumption

Yan Yuejin, research director of the E-House Research Institute, said that the LPR of 5 years and above has been lowered. It has a positive effect on the improvement of the economic situation and the optimization of the environment this year.

The biggest highlight this time is that the LPR has been cut by a very large amount, that is, by 25 basis points. In terms of historical adjustments, the mainland has had a total of 8 five-year LPR cuts, but the reduction in the past has generally been 5-15 basis points. The one-time cut of 25 basis points is the most drastic rate cut in history, which is the biggest signal to the market.

The rate cut will have a positive impact on the real estate market. The real estate market is currently in a phase of stabilization and recovery, but the recovery process needs to be consolidated. The interest rate cut is good for the reduction of the cost of funds, which directly leads to the reduction of housing loans, which has a positive impact on the housing loan market. We simply calculate that if the loan principal of 1 million yuan and the repayment of equal principal and interest for 30 years are calculated, the monthly payment of home buyers can be reduced by about 150 yuan after the interest rate cut, which is a relatively large reduction in burden, which will help to further promote mortgage application and consumption. It will also have a positive effect on the subsequent activity of the housing market.

Li Yujia of Guangdong Provincial Urban Planning Institute: After the interest rate cut, the interest rate on the first and second home loans will drop by at least 30 basis points this year

Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, believes that the LPR has been cut by 25 basis points at one time, which is the largest reduction in history on record, and the largest reduction in the past was only 15 basis points.

On the other hand, at the beginning of the year, the market expectation of a large and one-time reduction is in place to avoid squeezing toothpaste, resulting in the market expectation that "interest rates will be lowered, and then wait to buy houses and loans", resulting in a wait-and-see of purchasing power. This time, the dividends will be released in a lump sum, which will have a significant cost-reducing effect and promote residents to take out loans to buy houses.

More importantly, in the case of a sharp reduction in deposit interest rates, the interest rate of principal-protected wealth management has also fallen to a historical low, and the scissors gap between the mortgage loan interest rate and the principal-protected wealth management interest rate has widened, with the former basically twice that of the latter.

In the case of falling house prices or strong stock in anticipation of a decline, it is very uneconomical to take on a high interest rate to buy an asset that is expected to fall in price. Therefore, only by lowering the mortgage interest rate and narrowing the scissors difference with the capital guaranteed wealth management interest rate can residents be encouraged to increase leverage. Only by stabilizing the leverage ratio of real estate and stabilizing the flow of funds to real estate, so as to repair the financial accelerator effect of real estate, can the tightening situation be alleviated, which is also the purpose of this targeted interest rate cut.

After the one-time reduction is in place this year, it is unlikely that the LPR will be lowered in the future, and the mortgage interest rate will continue to fall. In January 2024, the average interest rate of the first mainstream mortgage in Baicheng is 3.84%, and the average interest rate of the second mainstream mortgage is 4.41%. Considering that mortgage rates fell not much last year, this year's first and second home loans have fallen by at least about 30 basis points this year.

(Financial Associated Press reporter Li Jie)

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