The mortgage interest rates in the two places have risen, and the time has come to buy a house?

Abstract: Based on city-specific policies and precise regulation, on the one hand, the policy effect continues to appear, and the real estate industry is gradually recovering, and it is not ruled out that more places will meet the dynamic adjustment of the lower limit of interest rates in the future, and on the other hand, there is room for further reduction of mortgage interest rates in some areas

Text: Yan Qinwen

Edited by Yuan Man

"Will the mortgage interest rate go up again?" a netizen in Shijiazhuang was puzzled, "I originally heard that the mortgage interest rate was very low and I was going to get on the bus in the near future, but now I can't understand it." ”

Recently, the news of the increase in the interest rate of the first home loan in Shijiazhuang has attracted market attention. After calling a number of local banks, the above news was confirmed by some bank staff - "We have received a notice that the current lower limit of the first home loan interest rate is 3.45%, which will be adjusted to 3.75% in April." A large state-owned bank Shijiazhuang branch mortgage business personnel said.

Coincidentally, in Huizhou, Guangdong, which is more than 1,800 kilometers away from Shijiazhuang, some banks have raised mortgage interest rates - according to the introduction of the housing loan business staff of a branch of a large local state-owned bank, the current interest rate for the first home loan is as low as 3.6%. In February, mortgage rates in the region were as low as 3.45%.

In the context of "mortgage interest rates falling to historical lows", the phenomenon of rising prices in the two places has triggered discussions among buyers in other regions about the future situation. ”

"This reflects the active implementation of city-specific policies and measures for precise regulation and control. Industry insiders pointed out that from the steady recovery of the economy, the effect of the domestic policy of stabilizing the property market continues to appear, and the real estate is gradually picking up, and it is not excluded that more places will meet the dynamic adjustment mechanism of the lower limit of interest rates in the future. In addition, due to factors such as urban policies and the market, there is room for further reduction of mortgage interest rates in some areas.

1. The reasons for raising mortgage interest rates are different in Shijiazhuang and Huizhou

"At present, the interest rate of 3.45% is still implemented, and it is necessary to apply for a loan as soon as possible, and there are many people who have come to consult the business recently. When asked whether the mortgage interest rate is about to be raised, the mortgage business staff of the Shijiazhuang branch of a large state-owned bank affirmed that according to the regulations, the interest rate on the first home loan in the region will be raised to 3.75% from April 1.

In fact, the increase in the mortgage interest rate in Shijiazhuang is in line with the rules for the adjustment of the dynamic mechanism of interest rates. On January 5, 2023, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued the Notice on Establishing a Long-term Mechanism for Dynamic Adjustment of Interest Rate Policies for Personal Housing Loans for Newly Issued First Housing Units (hereinafter referred to as the "Notice").

According to the "Notice" It is stipulated that starting from the fourth quarter of 2022, for cities where the sales price of newly built commercial residential buildings has decreased for three consecutive months on a month-on-month and year-on-year basis during the assessment period, the lower limit of the interest rate for commercial personal housing loans for the first home will be relaxed in stages, and for cities that have adopted a phased reduction or cancellation of the lower limit of the interest rate for commercial personal housing loans for the first housing in the local area, if the sales price of newly built commercial residential buildings has increased for three consecutive months month-on-month and year-on-year during the subsequent assessment period, the implementation of the national unified lower limit of the interest rate for commercial personal housing loans for the first housing shall be resumed from the next quarter。

Housing prices in Shijiazhuang belong to the above-mentioned situation of "rising month-on-month and year-on-year for three consecutive months". According to the "Changes in the Sales Price of Commercial Housing in 70 Large and Medium-sized Cities" released by the National Bureau of Statistics, from December 2023 to February 2024, the year-on-year data of the sales price index of newly built commercial residential buildings in Shijiazhuang were 101.2, 100.9 and 100.9, respectively, and the month-on-month data were 100.3, 100.1 and 100.1, respectively.

However, some bank mortgage business personnel in Shijiazhuang said that they are not sure about the specific adjustment time, "I just heard that it will be raised, and then the specific situation will ask the account manager of the docking of the purchased real estate." ”

Unlike Shijiazhuang, Huizhou has not seen housing prices "rise for three consecutive months both month-on-month and year-on-year" - according to the National Bureau of Statistics, from December 2023 to February 2024, the year-on-year and month-on-month data of the sales price index of newly built commercial residential buildings in Huizhou did not exceed 100 (the year-on-year data of the sales price index of newly built commercial residential buildings in February was 100).

According to data provided by a local real estate agent, the current interest rate on commercial loans for the first housing in Huizhou is generally 3.6% (LPR-35BP). Prior to this, the interest rate on first-time home loans of some banks was as low as 3.45% (LPR-50BP) for a period of time as low as the LPR for loans with a maturity of more than 5 years (LPR) fell to 3.95% in February.

However, some bank staff in Huizhou said that they did not know about the increase in mortgage interest rates, "I have not heard of any changes, and can only determine the current implementation of the interest rate of 3.6%, and the latest relatively large change is the LPR reduction last month." A local state-owned bank branch mortgage business staff said.

According to Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, the adjustment of the mortgage interest rate by banks is a normal business behavior carried out in line with the differentiated housing credit policy, and the bank has the right to adjust the loan pricing based on the judgment of risk control requirements, capital costs, regional market risks, etc.

"For the pricing of mortgage interest rates in Huizhou, I think it may be a requirement of the bank based on risk control. Because of the relatively concentrated concentration of foreign 'investors' in Huizhou, a large number of 'investors' have been attracted under factors such as the favorable planning of the Greater Bay Area and the spillover of housing demand in Shenzhen in the past, which has brought about an increase in housing prices and volume, but there are certain risks involved, and the short-term growth of loan demand under low interest rates may lead to an increase in the non-performing rate of housing loans in the future. Li Yujia pointed out.

It is worth mentioning that the current mortgage interest rate in Huizhou is still lower than the LPR-20 basis points (3.75%) of the national mortgage interest rate lower limit.

2. Has the situation changed?

In the eyes of industry insiders, the adjustment of mortgage interest rates in the above two places reflects the active implementation of city-specific policies and precise regulation policies and measures in various cities.

On the one hand, the housing price data reflects that the demand for the property market in the region (taking Shijiazhuang as an example) is picking up, and the lower limit of the minimum first home loan interest rate is raised, which may drive some wait-and-see customers in rigid demand to enter the market. Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said.

It is worth mentioning that according to data from the National Bureau of Statistics, in addition to Shijiazhuang, among the 70 large and medium-sized cities, the prices of newly built commercial housing in Shanghai and Xi'an have also increased year-on-year and month-on-month for three consecutive months (December 2023 to February 2024). According to the rules of the dynamic mechanism of interest rates, will these two cities usher in an increase in mortgage interest rates?

After calling a number of banks in the above two places, as of press time, no bank staff has reported that they have received a notice of imminent changes in mortgage interest rates. At the same time, since the current first home loan interest rates in the two places (3.85% in Shanghai and 3.75% in Xi'an) are above the lower limit of the national mortgage interest rate, the probability of rising in the eyes of industry insiders is not large.

It should be pointed out that the LPR with a maturity of more than 5 years fell the most in the history of February in February, and compared with the past, the current mortgage interest rate is already at a low level.

"Lending rates have fallen to historic lows and banks' net interest margins have fallen to their lowest level in 20 years. Last year, the State Administration also promoted the reduction of the interest rate on the stock of first home loans, which can save about 170 billion yuan in interest expenses for the majority of home buyers every year. Li Yunze, director of the State Administration of Financial Regulation, pointed out at the third "ministerial channel" of the second session of the 14th National People's Congress.

Chart: Minimum interest rate for first home loan in key cities after February 20, 2024 Chart: Minimum interest rate for first home loan in key cities after February 20, 2024

According to the data of the Shell Research Institute, in February 2024, the average interest rate of the first mainstream mortgage in Baicheng was 3.59%, and the average interest rate of the second mainstream mortgage was 4.16%, both of which were 25BP lower than the previous month, the largest monthly decline since 2019. In February, the interest rates of the first two mainstream mortgages fell by 45BP and 75BP respectively compared with the same period in 2023. The average loan cycle of banks in February was 18 days, three days shorter than the previous month and the fastest loan speed since 2019.

Against this backdrop, will the situation change for buyers who are ready to "get on the bus"?

"From the steady recovery of the economy, the effect of the domestic policy of stabilizing the property market continues to appear, and the real estate is gradually picking up, it is not excluded that more places will meet the dynamic adjustment mechanism of the lower limit of interest rates in the future. Zhou Maohua pointed out that the adjustment of LPR interest rates needs to be considered according to the overall domestic economic recovery, the financing needs of the real economy, the net interest margin of banks, the pace of real estate recovery, etc., but according to the dynamic adjustment mechanism of the first home loan interest rate, LPR+ plus points, major cities can adjust the "plus points" according to the recovery of the regional real estate market.

However, judging from the data of the first two months of this year, the current real estate market is still in a period of adjustment and transformation. According to the National Bureau of Statistics, from January to February, the sales area of newly built commercial buildings was 113.69 million square meters, down 20.5 percent year-on-year, and the sales of new commercial buildings were 1,056.6 billion yuan, down 29.3 percent year-on-year.

At the same time, according to the main financial data released by the central bank in February, residents' willingness to buy houses still needs to be improved. Resident loans decreased by 590.7 billion yuan in February, an increase of 798.8 billion yuan less than that in February 2023. Among them, medium and long-term loans, mainly housing mortgage loans, decreased by 103.8 billion yuan, a year-on-year decrease of 190.1 billion yuan.

On March 20, the People's Bank of China authorized the National Interbank Lending Center to announce the new loan market quotation rate (LPR), in which the LPR of more than 5 years, which is the main reference benchmark for the pricing of personal housing loans, was unchanged from the previous month at 3.95%.

"It is expected to be the same as last month, and a one-time reduction of 25 basis points in February is to give the market clear expectations in one step, rather than letting buyers wait until the bottom to buy a house, so the probability of LPR reduction in the short term is not large; Li Yujia analyzed.