Mortgage rates are at historic lows! Is it time to buy a home?

Mortgage interest rates are an important means of regulating the property market

Since April

According to the statistics of the China Index Research Institute

At present, there are more than 40 cities in the country

The lower limit of the interest rate for the first home loan will be phased out

Mortgage rates have fallen to historic lows

As a result, the cost of housing for residents is reduced

Mortgage rates are at record lows

It is conducive to the stable recovery of the housing transaction market

On April 22, the People's Bank of China authorized the National Interbank Lending Center to announce that the latest loan market prime rate (LPR) is 3.45% for 1 year and 3.95% for more than 5 years, unchanged from the previous month.

Although the LPR has not been adjusted this time, with the two reductions in the LPR of more than 5 years last year, the current first home loan interest rate in many cities has hit a record low. According to the monitoring data of the Beike Research Institute, in March 2024, the average interest rate of the first mainstream mortgage in 100 cities across the country was 3.59%, and the average interest rate of the second mainstream mortgage was 4.16%. Compared to the same period in 2023, interest rates for first homes are down 43 basis points and second home rates are down 75 basis points.

From the point of view of the energy level of the city

The average mortgage interest rates for the first and second homes in first-tier cities were 3.88% and 4.29% respectively;

3.61% and 4.17% in second-tier cities;

in third- and fourth-tier cities, 3.57% and 4.15% respectively.

Xu Xiaole, chief analyst of Beike Research Institute, said: "As of the end of March, the overall interest rates of the first and second home loans in Baicheng were at a historically low level, and the lower mortgage cost and faster lending speed will help promote the housing demand into the market and speed up the transaction process, which is conducive to the smooth recovery of the housing transaction market." "It is worth noting that since the reform of the loan prime rate (LPR) in August 2019, the average interest rate of newly issued personal housing loans has generally been higher than the average interest rate of newly issued corporate loans. Now, this relative relationship is in reverse. The central bank recently disclosed that the average interest rate of new personal housing loans issued in March was 3.71%, lower than the weighted average interest rate of new corporate loans of 3.75%.

Industry insiders told reporters that this value not only hit a new low on record, but also means that the current new mortgage interest rate and corporate loan interest rate have ended the pricing "inversion", and the mortgage interest rate is obviously below the corporate loan interest rate.

More than 40 cities have cancelled the lower limit of the interest rate on the first home loan

Commercial loan interest rates are likely to be further reduced

To reduce the cost of buying a house

More and more cities

Removal of the lower interest rate limit for the first home loan

Chen Wenjing, research director of the Index Division of the China Index Research Institute, told reporters that at present, more than 40 cities across the country have phased out the lower limit of the first home loan interest rate. The main content is basically that all financial institutions negotiate with borrowers independently in accordance with the principles of marketization and rule of law to reasonably determine the level of each mortgage interest rate. For example, most banks in Yantai have lowered the interest rate on personal first home loans by 15 basis points, from 3.75% to 3.6%.

Chen Wenjing further explained that the removal of the lower limit of the interest rate on the first home loan means that the interest rate of commercial loans may be further reduced. The mortgage interest rate in mainland China is linked to the loan prime rate (LPR), which is characterized by market-oriented dynamic adjustment. According to the regulations of the People's Bank of China and the former China Banking and Insurance Regulatory Commission, the lower limit of the interest rate of commercial personal housing loans for the first housing shall not be lower than the corresponding loan prime rate (LPR) minus 20 basis points. According to the calculation of the LPR of more than 5 years at that time of 3.95%, the interest rate of the first home loan cannot be lower than 3.75%.

However, 3.75% is not the absolute lower limit of the first home loan interest rate, and the mortgage interest rate can also be dynamically adjusted according to the housing price level. On December 30, 2022, the People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) decided to establish a long-term mechanism for dynamic adjustment of the interest rate policy of commercial personal housing loans for newly issued first housing on the basis of the phased adjustment of differentiated housing credit policies. For cities where the sales price of newly built commercial residential buildings has declined for three consecutive months month-on-month and year-on-year during the assessment period, the lower limit of the interest rate on commercial personal housing loans for the first home can be relaxed in stages. In accordance with the principle of city-specific policies, local governments can independently decide to maintain, reduce or cancel the lower limit of the interest rate of commercial personal housing loans for the first home in stages from the next quarter, which can break the unified standard of 3.75%.

According to central bank data, at the end of 2023, 101 of the country's 343 cities at and above the prefecture level lowered the lower limit of the interest rate on the first home loan, and 26 canceled the lower limit. Nowadays, more and more cities are joining the camp of removing the lower limit of mortgage interest rates to reduce the cost of housing for residents and boost market demand.

The "small spring" of the property market still needs policy support

Mortgage rates still have room to fall

Why so many cities want to be phased

What about the removal of the lower interest rate limit for the first home loan?

Zhang Dawei, chief analyst of Centaline Real Estate, told reporters: "The lower limit of the first home loan interest rate has been cancelled in various places, mainly due to the fact that the recent popularity of 'Xiaoyangchun' in some key cities is far less than in previous years, and the market activity in some second- and third-tier cities is also insufficient, and it is still necessary to continue to release favorable policies." ”

Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, believes that the phased cancellation of the lower limit of the first home loan interest rate in many places is mainly based on three reasons:

First, the price index of new homes in these cities has declined year-on-year and month-on-month for three consecutive months, touching the policy of dynamic adjustment of interest rates;

Second, in the first quarter, the commercial housing market in some cities continued to decline, and the market sentiment was relatively low;

Third, the latest survey results released by the China Index Research Institute show that among the reasons why residents are reluctant to buy houses, the first reason is that monthly payments and income expectations are unstable and cannot support house purchases.

Li Yujia told reporters: "The mortgage policy can be said to be a barometer of the property market to a certain extent, and the cancellation of the lower limit of the interest rate on the first home loan can reduce the burden of monthly payments, which is conducive to boosting the enthusiasm of borrowing to buy a house." ”

Regarding the future trend of mortgage interest rates, Chen Wenjing said that in the short term, there is still room for downward adjustment of LPR with a maturity of more than 5 years, and interest rate cuts are still expected within the year. It is expected that more cities will follow suit to lower mortgage interest rates.

Zeng Gang, director of the Shanghai Finance and Development Laboratory, also said that in the future, as the effect of the LPR reduction of more than 5 years is further revealed, the interest rate of new mortgages may continue to fall, and the mortgage interest rate still has room to fall with reference to the current long-term interest rate level such as 10-year treasury bonds.

For home buyers

Mortgage rates have fallen to new lows

Is now a good time to buy a home?

In the course of the reporter's interview, a number of industry insiders believe that from the perspective of saving money, the decline in interest rates can indeed allow consumers to reduce the cost of buying a house and reduce the pressure of repaying loans, but buying a house should still comprehensively consider the individual's ability to pay, income level, and should pay more attention to their own needs and the product itself.

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Produced by the New Media Editorial Department of China Consumer Daily

Source/China Consumer Daily, China Consumer Network

Reporter/Sun Wei

Editor/Li Xiaoyu

Producer/He Yongpeng, Ren Zhenyu