The down payment ratio is the lowest in history, and the interest rate is closer to 3%...... Some people are in a hurry to see the house, and some people continue to wait and see

On the 17th, there were three major positive news in the property market: the reduction of the down payment ratio, the cancellation of the lower limit of the housing loan interest rate, and the decline in the interest rate of the provident fund loan.

In the afternoon of the same day, after seeing these policies discussed in the WeChat group, Guo Jing (pseudonym), who works in Beijing and is worried about her children's primary school, was a little moved: "My down payment is not enough, and the reduction of the down payment ratio is an urgent need for me." Although the pressure on monthly payments has increased, you can choose to repay the loan early in the later stage. Our budget is already limited, and now we are worried about the temporary price increase of the owner, and we are in a hurry to see the property. ”

There are also those who are calm. Zhang Hui (pseudonym), who has not seen a property in Beijing for a long time, told Zhongxin Jingwei that he will not restart the property viewing plan for the time being, saying: "Lowering the down payment is not very attractive to me, because I also want to pay more down payment to relieve the pressure of monthly payment." What really stimulates everyone to look at the house is the price, so I'll wait. ”

After the issuance of the above policy, Sino-Singapore Jingwei contacted real estate agents in many places. A real estate agent in Zhengzhou, Henan Province, said: "The policy is useful, especially for customers who just need to improve it, the down payment ratio has been reduced from a minimum of 20% to a minimum of 15%, and the threshold for buying a house has been lowered." A real estate agent in Shanghai said that not many customers have called for inquiries yet.

Beijing's current minimum down payment ratio is 30%, and the policy has opened a window for Beijing to lower the down payment ratio, a Beijing real estate agent said, and it will be necessary to wait for specific measures to be implemented. "For the time being, no owner has said that he wants to increase the price, and the specific details have not yet come out." Another real estate agent in Beijing said that a batch of properties have been digested recently, and the owner's offer has also come down, so he should start.

Aspect 1: The down payment ratio has fallen to an all-time low

On May 17, the People's Bank of China and the State Administration of Financial Supervision and Administration issued a document saying that the minimum down payment ratio for commercial loans for first housing and commercial loans for second housing was adjusted to no less than 15% and not less than 25% respectively.

Taking the total housing payment of 1 million yuan as an example, the down payment for the first house has been reduced from the previous minimum of 200,000 yuan to the minimum of 150,000 yuan, and the threshold for buying a house has been reduced. Correspondingly, the amount of the loan from the bank was increased from $800,000 to $850,000.

"This is the lowest down payment ratio in history, and it is not only the most lenient policy in the history of mortgage lending, but also the most lenient policy of all types of home buying policies in recent years." Yan Yuejin, research director of the E-House Research Institute, said in an interview with China-Singapore Jingwei that in the past, the minimum down payment ratio of housing loans in the country was 20%, but there are different voices on whether the down payment ratio should continue to be reduced.

"The down payment for the first home has dropped to 15%, which is the lowest level in history." Zhang Dawei, chief analyst of Centaline Real Estate, analyzed that after the implementation of the policy, it means that the minimum down payment ratio of the first and second houses in all cities in the country can be lowered, which has a greater impact on the first and second-tier cities, and Beijing and other cities may greatly reduce the down payment ratio.

At the end of August 2023, the minimum down payment ratio for commercial personal housing loans for the first housing in the country will be unified to no less than 20%. In December, Beijing lowered the minimum down payment from 35 percent to 30 percent, failing to enforce a minimum of 20 percent. Therefore, Zhang Dawei believes that how to adjust the down payment ratio in various cities still needs to be introduced by the competent departments of various cities.

Chen Wenjing, director of market research at the China Index Research Institute, pointed out that at present, many places across the country have reduced the down payment ratio to 20% and the second set to 30%, and only a few cities have a higher down payment ratio, such as the first set of down payment ratio in first-tier cities are 30%, and the second set ranges from 40% to 50%. After the introduction of the policy of lowering the lower limit of the down payment ratio, it is expected that more cities will follow up and implement it, and there is also room and expectation for downward adjustment in first-tier cities, which will further reduce the threshold for home buyers.

Aspect 2: A provident fund loan of 1 million can save 48,500 interest

In this policy, both provident fund loans and commercial housing loans have been adjusted.

On the 17th, the People's Bank of China issued a document saying that from May 18, 2024, the interest rate of personal housing provident fund loans will be lowered 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.

Currently, most homebuyers have CPF loan terms of more than 5 years. Taking the provident fund loan of 1 million yuan for the first house as an example, choose the equal principal and interest repayment method, the loan term is 30 years, the monthly payment will be reduced from 4,270.16 yuan to 4,135.57 yuan, a decrease of about 135 yuan, and the total interest will be reduced from 537,300 yuan to 488,800 yuan, saving 48,500 yuan.

Will home buyers who have already taken out a CPF loan be able to take advantage of this new interest rate concession? On the 17th, Zhongxin Jingwei consulted the Beijing Housing Provident Fund Management Center as a home buyer, and the staff said that the interest rate on the existing housing provident fund loan will not be adjusted this year, and will be automatically lowered from January 1 next year. Lenders who are going through the CPF loan process also need to consult the specific department that handles the loan.

Yan Yuejin pointed out that the interest rate on the first housing provident fund loan with a term of more than 5 years was 3.1%, which was reduced to 2.85% this time. In the case of continuous interest rate reduction of commercial bank loans, the interest rate difference between the interest rate of commercial loans and the interest rate of provident fund loans is not large, so the interest rate of provident fund is inevitable.

Aspect 3: The interest rate of commercial loans is closer to 3%.

The People's Bank of China also issued a document saying that 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.

Wang Qing of the Research and Development Department of Oriental Jincheng and Feng Lin, a senior analyst, believe that the cancellation of the lower limit of the loan interest rate for the first and second homes means that commercial banks can independently determine the local mortgage interest rate level according to the local property market conditions, the credit risk level of the lender and other factors. This actually opens the door for a larger reduction in residential mortgage interest rates in the future.

Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, said that recently, many hot cities have significantly adjusted the lower limit of the interest rate for the first and second home loans, as low as 3.25%. Judging from recent financial data, credit growth has changed from a supply constraint to a demand constraint, that is, insufficient demand is the main reason for restricting the provision of credit, especially mortgage loans.

Zhang Dawei believes that from a national point of view, except for a few first-tier and second-tier cities, the interest rate on the first home loan in most cities has dropped to about 3.45%, and some cities are even around 3.25%. This policy provides the possibility for the mortgage interest rate to fall further, and the interest rate of the first home commercial loan may move closer to 3% in the future. Wang Xiaochang, chief analyst of Zhuge Data Research Center, believes that the interest rate on commercial loans is expected to fall below 3%, falling to the lowest level in history, and the cost of loans for residents will further decline.

It is worth noting that the People's Bank of China also stressed that the provincial-level branches of the People's Bank of China guide the self-discipline mechanism of market interest rate pricing at the provincial level in accordance with the principle of city-specific policies, 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 according to the real estate market situation in each city within their jurisdiction and the regulation and control requirements of the local government. Banking financial institutions should reasonably determine the specific interest rate level of each loan.

Dong Ximiao, chief researcher of Zhaolian, pointed out that the interest rate of personal housing loans has actually formed a "three-tier pricing mechanism": first, at the national level, the People's Bank of China determines the lower limit of the national interest rate policy; Second, at the local level, the branches of the People's Bank of China determine the lower limit of the local housing loan interest rate on the basis of the national lower limit of the interest rate; Third, at the bank level, the bank comprehensively considers the borrower's qualifications, capital cost and other factors, and negotiates with the borrower to determine the actual housing loan interest rate.

"After the cancellation of the lower limit of the national housing loan interest rate policy, it is expected that most places in the country will no longer set the lower limit of the housing loan interest rate, which will be determined by the bank through negotiation with the borrower; However, first-tier cities will still likely set a lower limit on housing loan interest rates. Dong Ximiao said.

Wang Qing's team pointed out that the city's policy and "housing not speculation" are not only applicable nationwide, but also the policy tone that has been adhered to for a long time. For example, in terms of purchase restriction policy, in the future, first-tier cities will retain certain purchase restriction measures, and the reduction of mortgage interest rates will not "go hand in hand", and the reduction in first-tier cities will be relatively small.

According to the People's Bank of China data, the interest rate on new residential mortgages issued at the end of March this year was 3.69%, considering the current low price level, the real mortgage interest rate (nominal mortgage interest rate - GDP deflator) is among the highest levels in history, and has continued to rise since 2021. In the future, the regulator may urge commercial banks to reduce residential mortgage interest rates quickly through window guidance and other means, until the property market bottoms out and rebounds. At the same time, under the current market structure, there is no need to worry too early about the problem of housing prices that may be triggered by the new deal.