The central bank's real estate financial policy "three consecutive issuances": reduce the down payment, lower the provident fund interest rate, and cancel the lower limit of the commercial loan interest rate

The official account of Beijing Business Daily

2024-05-17 14:39Published on the official account of Beijing Business Daily in Beijing

The property market has another favorable policy. On May 17, the central bank issued three real estate financial policy notices one after another, canceling the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level, reducing the interest rate of personal housing provident fund loans by 0.25 percentage points, and adjusting the minimum down payment ratio of personal housing loans.

Minimum down payment for first home reduced to 15%

According to the Notice of the People's Bank of China on Adjusting the Interest Rate Policy for Commercial Personal Housing Loans, in order to implement the decisions and arrangements of the Party Central Committee and the State Council, adapt to the new changes in the supply and demand relationship of the mainland real estate market and the new expectations of the people for high-quality housing, and promote the stable and healthy development of the real estate market, the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level has been abolished.

The provincial-level branches of the People's Bank of China, in accordance with the principle of city-specific policies, guide the self-discipline mechanism of market interest rate pricing at the provincial level, and independently determine whether to set the lower and lower limits (if any) of the interest rates of commercial personal housing loans in each city within their jurisdiction according to the real estate market situation of each city within their jurisdiction and the regulatory requirements of the local government.

Banking financial institutions should be based on the provincial market interest rate pricing self-discipline mechanism to determine the lower limit of interest rates (if any), combined with the institution's operating conditions, customer risk status and other factors, reasonable determination of the specific interest rate level of each loan.

According to the Notice of the People's Bank of China and the State Administration of Financial Supervision on Adjusting the Minimum Down Payment Ratio of Personal Housing Loans, for resident families who take out loans to purchase commercial housing, the minimum down payment ratio of commercial personal housing loans for the first house is adjusted to not less than 15%, and the minimum down payment ratio of commercial personal housing loans for second houses is adjusted to not less than 25%.

On this basis, the provincial-level branches of the People's Bank of China and the dispatched agencies of the State Financial Supervision and Administration independently determine the lower limit of the minimum down payment ratio for commercial personal housing loans for the first and second houses in each city under their jurisdiction in accordance with the requirements of urban regulation and control and in accordance with the principle of city-specific policies.

Li Yujia, chief researcher at the Guangdong Provincial Housing Policy Research Center, said that lowering loan interest rates and lowering income multipliers means lowering monthly payments, especially after the lower limit of interest rates is not restricted, and monthly payments may be significantly reduced. Coupled with the fact that house prices have fallen significantly, the monthly payment will shift from "unpayable" to "affordable" for many people in the future. This has a great incentive effect on young people and new citizens to buy houses. Judging from the data since last year, they mainly buy second-hand houses based on rigid demand, which is of great significance for promoting the circulation of new houses and second-hand houses, removing inventory and listings, activating transaction sentiment, and stabilizing the price system.

The interest rate of the personal housing provident fund was reduced by 0.25 percentage points

According to the Notice of the People's Bank of China on Reducing the Interest Rate of Personal Housing Provident Fund Loans issued on the same day, from May 18, 2024, the interest rate of personal housing provident fund loans will be reduced by 0.25 percentage points, the interest rate of the first set of personal housing provident fund loans below 5 years (including 5 years) and more than 5 years will be adjusted to 2.35% and 2.85% respectively, and the interest rate of the second set of personal housing provident fund loans below 5 years (including 5 years) and more than 5 years will be adjusted to not less than 2.775% and 3.325% respectively.

Yan Yuejin, research director of the E-House Research Institute, said that the policy and the reduction of the down payment ratio of the mortgage to 15% together constitute the two super blockbuster policies on May 17, which have a very significant impact on the market and are an important embodiment of the new round of housing purchase policies. The policy is clear, and the interest rate on personal housing provident fund loans will be lowered by 0.25 percentage points. Among them, the first housing provident fund loan with a term of more than 5 years is 2.85%. Previously, the CPF loan interest rate was 3.1%. Accordingly, the interest rate of provident fund loans, like the previous interest rates of commercial banks, has generally maintained a continuous easing orientation.

In Yan Yuejin's view, the reduction of the interest rate on provident fund loans has been discussed in the industry before. Especially in the case of commercial bank loan interest rate cuts, the mortgage interest rate in many places has reached the level of 3.45%. At this time, there is not much difference between the interest rate difference and the CPF loan. Therefore, it is inevitable that the interest rate of the provident fund will be reduced. This policy has a positive effect on the subsequent application of provident fund loans, the reduction of housing costs, and the support for housing consumption. In particular, the superimposed mortgage down payment policy will have a substantial impact on the subsequent home buyers' active entry into the market. The follow-up "low down payment + low commercial loan interest rate + low provident fund interest rate" purchase model will be formed, which will fully contribute to the activity of the real estate sales market this year and also help to comprehensively boost the recovery of the real estate market.

Beijing Business Daily reporter Wang Yinhao Li Han

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