Four benefits! Reduction of down payment, interest rate, provident fund interest rate, collection and ......

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2024-05-17 17:23Posted on the official account of Guangdong Tiantian Say Money

Original Liu Xiaobo

The big move in the property market that the market is looking forward to is finally here!

At noon today, the central bank, the State Administration of Financial Supervision and other departments announced 4 big moves to save the market in one go!

Trick 1: Reduce the down payment ratio.

For households that take out loans to purchase commercial housing, the minimum down payment ratio for commercial personal housing loans for the first house is adjusted to not less than 15%, and the minimum down payment ratio for 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.

Trick 2: Reduce the interest rate of provident fund loans.

The People's Bank of China decided to reduce the interest rate of personal housing provident fund loans by 0.25 percentage points from May 18, 2024, and the interest rate 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 rate 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.

Trick 3: At the national level, cancel the lower limit of the interest rate on loans for the first and second homes.

The lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level will be 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.

Trick 4: In cities with a large inventory of commercial housing, the government can purchase part of the commercial housing at a reasonable price as appropriate.

At the video conference on the work of guaranteeing the delivery of housing held today, Vice Premier He Lifeng of the State Council announced that the relevant local governments should proceed from the actual situation and properly dispose of the idle stock of residential land that has been transferred by means of recovery and acquisition as appropriate, so as to help real estate enterprises with financial difficulties to solve their difficulties. In cities with a large inventory of commercial housing, the government may purchase some commercial housing at a reasonable price as appropriate.

What is the strength of the above benefits, and how will it affect the property market in the future? Let me say what I think.

In fact, as early as yesterday, there were rumors that there would be an important meeting this morning, and then a series of policies to stimulate the property market were announced. Nowadays, the small composition has basically come true.

Reducing the down payment for a first home to less than 20% is beyond the reach of many people, but it is within my many recommendations. The following screenshot is a paragraph from my February 19th issue in this issue:

In the past, it was believed that if the down payment ratio fell below 20%, financial risks would definitely brew. In fact, with the change of regulatory measures and credit reporting methods, it is entirely possible to reduce the down payment ratio of the first home to less than 20%, and my suggestion is to reduce it to 10% or even lower.

Now, the central bank has reduced the down payment ratio for the first home to 15%, and the second home to 25%, which is only the first step, and there is still a lot of room for reduction in the future.

For example, in the future, you can get 5% for the first house, 15% for the second house, and 25% for the third house.

The down payment ratio of 15% has set the lowest value since the comprehensive housing reform in 1998, and it also means that the leverage ratio of the property market has increased to a record high - 6.67 times!

In this regard, some people must be sneering: the down payment ratio has been reduced, but the monthly payment has been increased, which is useless!

Don't be in a hurry to be sarcastic, reducing the down payment ratio and increasing the leverage ratio of the property market is good, and it is a big good.

In the future, not only can we continue to reduce the down payment ratio, but we can also extend the mortgage term, such as extending the maximum loan period from 30 years to 40 years. These are all good news for the property market.

Let's look at another big move, cancel the lower limit of the loan interest rate policy for the first and second homes.

Previously, the lower limit of the interest rate for the first home in the country was LPR-20 basis points, and the second house was LPR+20 basis points. The LPR is currently 3.95%, so the lower limit of the interest rate is 3.75% for the first home and 4.15% for the second home.

However, for cities where new home prices have fallen month-on-month and year-on-year for three consecutive months, it is allowed to break the lower limit of the first home interest rate. Therefore, at present, the interest rate of the first home in dozens of cities has broken the lower limit, the lowest is 3.25%, and most are around 3.45%.

Recently, Hangzhou, Hefei and other cities have relaxed the criteria for the recognition of second home loans, so in fact, some second homes can also enjoy preferential interest rates for first home loans.

Now the central bank has announced that it will "cancel the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level", and it is up to each locality to decide whether to set the lower and lower limits of the interest rate for commercial personal housing loans.

In fact, it is to give greater autonomy to all localities, not only the interest rate on the first home loan will continue to fall, but also the second house and even the N house will fall across the board.

Continuing to reduce the interest rate on CPF loans is also a suggestion I have made many times.

The reason is simple, after the continuous reduction of interest rates on commercial mortgages, its interest rate level has approached that of CPF loans. For example, the city with the lowest interest rate for the first home loan has reached 3.25%, while the interest rate for provident fund loans with a term of more than 5 years is 3.10%.

Therefore, 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.

The intensity of the interest rate cut on provident fund loans this time is significantly higher than that in 2022. Last time it was a 15 basis point cut, this time it was a 25 basis point cut.

Looking ahead, as the LPR continues to cut interest rates, the interest rate on CPF loans will also continue to fall. Maybe in about 2 years, we can see the interest rate of CPF loans with a maturity of more than 5 years drop to less than 2%!

The fourth good thing is that the government collects and stores the amount of housing for affordable housing, and properly disposes of the idle stock of residential land that has been transferred by means of recovery and acquisition, so as to help real estate enterprises with financial difficulties to solve their difficulties.

For this benefit, the market is full of expectations. Some people even misinterpreted a brokerage research report, believing that the government may spend 7 trillion yuan to buy millions of stock houses.

I don't think the local government has the financial resources to buy so much of the stock of housing.

What really needs a considerable amount of affordable housing is only dozens of large cities, including super-large and mega-cities. Ordinary prefecture-level cities, county-level cities and county towns do not have much incremental population. Buying a lot of stock houses only transfers the housing inventory to the government, which exacerbates the local debt burden.

Therefore, the official statement this time is that "in cities with a large inventory of commercial housing, the government can purchase some commercial housing at a reasonable price as appropriate".

For this matter, I had a detailed analysis on the official account of "Liu Xiaobo Says Finance" yesterday, and I will not expand it here.

Why the sudden shot at this time? Because the market is still declining:

The above figure is the latest commercial housing sales announced by the Bureau of Statistics this morning, both the sales area and the amount are very sluggish, and the property market has become an important drag on the economic recovery.

Can today's big move turn the market around?

It's hard to do it overnight.

But this is a good start, and we can continue to build on it in the future. For example, the down payment ratio of the first home exceeds 20%, which is a historic event, which means that we are constantly emancipating our minds.

In the future, we will continue to cut interest rates, reduce the reserve requirement, reduce down payments, extend the mortgage term, recover excess land, and collect storage housing.

If the property market does not pick up, policies will continue to come out!

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