Interpretation one by one丨The down payment ratio is the lowest in history, the lower limit of the interest rate is canceled, and the acquisition of state-owned assets is supported! How powerful is the real estate portfolio?

Within a day, many central ministries and commissions played a set of "policy combinations" around the real estate market.

On May 17, a national video conference was held in Beijing to support state-owned enterprises to acquire completed and unsold commercial housing, revitalize the stock of land, and ensure the delivery of buildings. On the same day, the central bank and the State Administration of Financial Supervision issued three policies one after another, announcing the reduction of the loan down payment ratio, the cancellation of the lower limit of the mortgage interest rate, and the reduction of the interest rate of the personal housing provident fund loan.

How strong is this wave of policy combinations? How will it affect the real estate market? The following is an article-by-article interpretation of The Paper:

Minimum down payment of 15% for first home

On May 17, the People's Bank of China and the State Administration of Financial Supervision and Administration issued a notice on adjusting the minimum down payment ratio of personal housing loans, which mentioned that 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 no less than 15%, and the minimum down payment ratio of commercial personal housing loans for second houses is adjusted to no less than 25%.

According to the industry, the current down payment ratio of housing commercial loans has fallen to a record low.

CRC Research Center pointed out that at the end of August 2023, the central bank lowered the minimum down payment ratio for the first and second homes in the country to 20% and 30% respectively. Since then, except for 8 cities such as Beijing and Shanghai, other cities have adjusted the down payment ratio to the lower limit stipulated by the state. This time, the central bank will reduce the down payment ratio by another 5 percentage points, aiming to further reduce the pressure of down payment on home purchases and lower the threshold for home purchases.

Abolish the mortgage interest rate floor

On the same day, the People's Bank of China issued a notice on adjusting the interest rate policy for commercial personal housing loans, removing the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level.

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 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 regulation and control requirements of the local government.

Chen Wenjing, director of market research at the China Index Research Institute, pointed out that the lower limit of the first and second home loan interest rate policy at the national level will be cancelled, and the lower limit of the mortgage interest rate will be regulated and controlled by the local government. Previously, the lower limit of the interest rate of the first and second home loans was LPR-20BP for more than 5 years and LPR+20BP for more than 5 years (LPR 3.95% for more than 5 years in April).

According to the data released by the central bank, as of the end of March, 75 of the country's 343 cities (prefecture level and above) have lowered the lower limit of the interest rate on the first home loan, and 64 have canceled the lower limit.

In addition, according to the monitoring of the China Index Research Institute, more than 20 cities announced the phased cancellation of the lower limit of the first home loan interest rate from April; In May, Nanjing and Hefei successively announced the cancellation of the lower limit of the interest rate for the first home loan. At present, some banks in some cities have implemented the first home loan interest rate at about 3.1%, the central bank has canceled the lower limit of the national mortgage interest rate, and the policy is extended to the second house, and it is expected that more cities will reduce the mortgage interest rate, and the space for the reduction of the mortgage interest rate in the first-tier and core second-tier cities is also expected to open.

The industry believes that the follow-up mortgage interest rate is expected to fall below 3%, falling to the lowest level in history, and the cost of residential housing loans will further decline.

Reduction of interest rates on provident fund loans

The People's Bank of China issued a notice on lowering the interest rate of personal housing provident fund loans, starting 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.

Wang Xiaochang, chief analyst of Zhuge Data Research Center, pointed out that lowering the interest rate of personal housing provident fund loans will enable more employees with stable employment to buy houses at a lower cost, enhance their ability to buy houses, and stimulate workers with stable employment to enter the market.

As of press time, Guangzhou, Suzhou, Chengdu, Hefei and other places have followed up to reduce the interest rate of housing provident fund loans.

300 billion yuan of re-lending to support the acquisition of commercial housing by state-owned enterprises

In addition to the continued easing of credit policies, there are also strong support measures to support state-owned enterprises in acquiring commercial housing, revitalizing the stock of land, and ensuring the delivery of buildings.

On the afternoon of May 17, the Information Office of the State Council held a regular briefing on the policies of the State Council to introduce the relevant policies for ensuring the delivery of housing. Tao Ling, deputy governor of the People's Bank of China, said that the establishment of 300 billion yuan of affordable housing reloans, encouraging and guiding financial institutions to follow the principles of marketization and rule of law, support local state-owned enterprises to purchase completed and unsold commercial housing at reasonable prices, and use them as placement or rental type affordable housing, is expected to drive bank loans of 500 billion yuan.

CRIC Research Center believes that this policy is an important measure introduced by the central bank to support the construction of a new model of real estate development, which is conducive to achieving multiple goals through a market-oriented approach. The first is to speed up the destocking of existing commercial housing. Local state-owned enterprises, with the support of banks, participate in the acquisition of completed and unsold commercial housing in a market-oriented manner, which can promote the destocking of the commercial housing market. The second is to speed up the supply of affordable housing. The acquired commercial housing is used as affordable housing for sale or rent, which can better meet the housing needs of wage and salary groups. The third is to help ensure the delivery of buildings and the "white list" mechanism. After the real estate enterprise sells the completed commercial housing, the returned funds can be used to continue the construction of the project under construction and improve the financial situation of the real estate enterprise.

According to incomplete statistics, since 2022, the government's commercial housing collection and storage model has been implemented in 13 cities including Jinan, Suzhou, Fuzhou, and Tianjin.

Cao Jingjing, general manager of the index research department of the China Index Research Institute, pointed out that at this stage, in addition to the inventory of new houses for sale, projects under construction and vacant houses, the current digestion of stock real estate also has to face the impact of rising second-hand housing listings and poor replacement on the new housing market. From the perspective of policy measures, in addition to the direct acquisition of real estate enterprises mentioned in this meeting, many cities have also made a lot of explorations in the past two years in the trade-in (state-owned enterprises to collect the old for the new, intermediaries to give priority to selling, etc.), non-residential to rent and other paths. In the future, more detailed supporting policies will be further implemented to digest the stock of real estate, and detailed policies for state-owned enterprises to acquire stock housing, such as the scale of acquisition and purchase price, are also expected to continue to follow.

Support local governments to reclaim idle land

At the regular policy briefing of the State Council, Liu Guohong, vice minister of the Ministry of Natural Resources, said that on the basis of extensive research, it is ready to introduce policies and measures to properly dispose of idle land and revitalize the use of stock land, so as to support local governments to properly dispose of the idle stock of residential land that has been transferred by recovering and acquiring as appropriate, and help enterprises to solve their difficulties.

Cao Jingjing pointed out that the Ministry of Natural Resources has previously issued a notice, requiring that the new land supply in various places needs to be combined with the local commercial housing de-cycle and the revitalization of the stock scale, and the revitalization of the stock of land scale as an important basis for incremental supply. The meeting emphasized that in light of the actual situation, local governments should be supported to recover idle land at a reasonable price in accordance with the principle of "ordering according to demand" for the construction of affordable housing. At the same time, it is also mentioned that the role of the secondary market of land should be brought into play, and the transfer of advance notice registration and "transfer with mortgage" should be supported, and the transfer or cooperative development should be encouraged. In terms of financial support, it is mentioned that "for the recovered or acquired land used for affordable housing projects, financial support can be provided through local government special bonds", and preferential tax policies for affordable housing can also be enjoyed.