The central bank issued three documents in a row to adjust policies such as down payment and loan interest rates for buying a house, which experts said was very rare

Southern Metropolis Daily

2024-05-17 14:59Posted on the official account of Guangdong Southern Metropolis Daily

The central bank issued three documents in a row to adjust policies such as down payment and loan interest rates for buying a house, which experts said was very rare

On the afternoon of May 17, the central bank took action to comprehensively adjust the housing loan interest rate policy.

The three blockbuster information released by the central bank in a row include: first, adjusting the interest rate policy of commercial personal housing loans, and canceling the lower limit of the interest rate policy of commercial personal housing loans for the first and second houses at the national level; Second, the interest rate of personal housing provident fund loans will be lowered by 0.25 percentage points; third, the minimum down payment ratio of personal housing loans will be adjusted, and the minimum down payment ratio of commercial personal housing loans for the first house will be adjusted to no less than 15% for resident families who take out loans to purchase commercial housing, and the minimum down payment ratio for commercial personal housing loans for second houses will be adjusted to no less than 25%.

In the view of Yan Yuejin, research director of the E-House Research Institute, the most important thing is the adjustment of the down payment ratio, "It is the most relaxed down payment policy in the history of China's home purchase, which is very heavy and has a very obvious role in stimulating market transactions." He also used "very rare" to summarize the recent easing policy, he told reporters in Nandu, "the policy will continue to have an impact, for this week's market transactions, next week's real estate stocks, this year's property market, the boost of buyers' market confidence, the overall improvement of the financial situation of real estate enterprises, etc., fully reflects the country's attention and support for the real estate market, but also fully reflects the housing market for the good development of the foundation is continuing to increase." ”

Down payment for first home drops to 15%

The People's Bank of China (PBoC) and the State Administration of Financial Supervision (SFA) jointly issued a document to adjust the minimum down payment ratio for individual housing loans, clarifying that the minimum down payment ratio for commercial personal housing loans for the first house is not less than 15%, and the minimum down payment ratio for commercial personal housing loans for the second house is adjusted to no 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.

This means that if you are a first-time home buyer, the minimum down payment for a $10 million property becomes $1.5 million. Of course, a loan is needed to make up the payment, so this is equivalent to providing residents with higher leverage for their properties.

Yan Yuejin said that in the past, the lowest down payment ratio for house purchases in the country was 20%, but there have always been objections to continuing to reduce the down payment ratio, but this time the down payment ratio has been historically reduced to 15%, which is not only the most relaxed policy in the history of mortgage loans, but also the most relaxed policy among all kinds of housing purchase policies in recent years.

"Compared with the relaxation of purchase restrictions in the past and the non-recognition of mortgages, the energy level of the down payment ratio reduction far exceeds that of other policies, and it can even be understood as the most relaxed policy in history. This naturally shows that the national level attaches great importance to destocking and supporting reasonable housing consumption demand, which is of great significance for the pull of housing loans, and for the rapid release and large-scale release of rigid demand and improved housing. This policy will have a very significant positive impact on the real estate market and real estate stocks. Yan Yuejin said.

Provident Fund Loan Interest Rate Lowered, Commercial Loan Interest Rate "Relaxed"

At the same time, the central bank decided to reduce the interest rate of personal housing provident fund loans by 0.25 percentage points from May 18, 2024, and the interest rates of the first set of personal housing provident fund loans for less than 5 years (including 5 years) and more than 5 years will be adjusted to 2.35% and 2.85% respectively, and the interest rates of the second set of personal housing provident fund loans for less than 5 years (including 5 years) and more than 5 years will be adjusted to not less than 2.775% and 3.325% respectively.

In addition to provident fund loans, commercial loans will also be "relaxed", and the central bank announced the cancellation of the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level.

Nandu reporter learned from the person in charge of the credit business of a large bank in Shanghai that although the central bank has announced the cancellation of the lower limit of the interest rate policy, the interest rate policy in Shanghai depends on the results of the meeting of the Shanghai Banking Association. This is also in line with the central bank's notice, which states that "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 of the interest rate of commercial personal housing loans in each city within their jurisdiction (if any) according to the real estate market situation of each city within their jurisdiction and the regulation and control requirements of the local government." ”

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

According to statistics, in March, the weighted average interest rate of new loans was 3.99%, down 35 basis points (bp) year-on-year. Among them, the weighted average interest rate of personal housing loans was 3.69%, a sharp decrease of 45 basis points year-on-year and a decrease of 28 basis points from the beginning of the year. Banks' asset yields continued to be under pressure in the first quarter of 2024, with the weighted average net interest margin of major listed banks at 1.57%, narrowing by 13 basis points year-on-year. Among them, the net interest margins of state-owned banks, joint-stock banks and urban rural commercial banks were 1.51%, 1.79% and 1.8% respectively, narrowing by 13 basis points, 13 basis points and 8 basis points respectively year-on-year. Therefore, there is limited room for further decline in bank lending rates.

Written by: Nandu reporter Zhao Weijia from Shanghai

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