"It's like heating up a piece of water that is about to freeze and give the whole industry and the economy a breath of relief."
Text / Ba Jiuling
This rare, central-level blockbuster meeting has been in the making for a long time.
In the past, foreign media reported that the domestic real estate rescue policy was about to be introduced, and then 1 trillion yuan of long-term special treasury bonds landed; From the cancellation of purchase restrictions in various places, to the release of 13 new policies for the property market in Foshan, and then to the Lin'an District Government of Hangzhou to collect and store...... All the foreshadowing is telling us that on May 17, the real estate work related conference organized by the State Council will mark an extraordinary moment for China's real estate.
The central bank, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, the top leaders of local governments and the presidents of state-owned banks all came, and many bank leaders from other places rushed to Beijing overnight on the 16th. This meeting is not only about China's economy, but also about the rise and fall of the future wealth and destiny of every ordinary person.
The dilemma of real estate today is: on the demand side, no one buys. On the supply side, you can't sell it. The imbalance between supply and demand, sluggish transactions, and falling prices are the laws of economics that no commodity can escape, and houses condense most of China's wealth, and the consequences are unbearable once they continue to fall.
So, in this important meeting, what "tricks" did the masters of each faction play? Let's take a look at the specific policies while thinking about it.
▶ ▷ The first trick: the down payment ratio for the first house is reduced to 15%, and the second house is reduced to 25%.
Interpretation: The down payment of 15% has set a record low, and the previous minimum was 20%. The threshold for buying a house has been greatly reduced, and the mother-in-law has passed.
Doubt: A down payment of 15% means that the leverage becomes 6.6 times. If the house rises by 15%, the principal will be doubled, and if it falls by 15%, it will lose the down payment and lose all your money. What is the significance of this policy at a time when household leverage has reached its limit and personal and financial risks have increased?
▶ ▷ The second move: the interest rate of the first set of personal provident fund loans is reduced to 2.85%, and the second house is reduced to 3.325%.
Interpretation: Generally speaking, a signal of the recovery of the real estate market is the entry of a large number of buyers who just need to buy a home. But judging from the data, just need is still waiting. Today's decline in CPF loan interest rates is actually a major positive for families who just need it, and the interest rate of 2.85% is equivalent to half of the peak of commercial loans. If both husband and wife have a good CPF loan amount, the pressure of loan repayment will be greatly reduced.
Doubts: There is a lot of improvement demand in China today, and the recovery of the property market needs to be driven by improvement demand. But it seems that the first and second homes still do not enjoy the same interest rates, and the benefits in this regard do not seem to be sufficient?
▶ ▷ The third move: cancel the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses.
Interpretation: What does it mean to "cancel the lower limit"? In the past, there was a benchmark called LPR, and the mortgage interest rate fluctuated slightly on this basis. The lower limit of the interest rate for the latest first home is LPR-20 basis points, which is 3.75%.
After the lower limit is lifted, commercial banks can set their own interest rates, which means that there will be market competition among banks. Today, a bank will quote you 3.5%, and tomorrow a bank will quote 3.3%, and you are not satisfied, as long as there is no inversion of the deposit and loan interest rate, it is not impossible for the mortgage interest rate to be cut below 3% by you. This phenomenon has already appeared in second-tier cities, and the lowest has dropped to 3.25%.
It can be seen with the naked eye that the financing cost of buying a house has been greatly reduced, which is a major policy for the benefit of the people. However, it should be noted that the central bank emphasized that each city should still decide whether to set the lower limit of interest rates according to the actual situation.
Doubts: First, after marketization, will the mortgage interest rate be "not the lowest, only lower", and eventually become zero interest rate? Second, if you have bought a house before, for example, the interest rate is 4%, and it is still implemented according to the original interest rate, it will cause unfair emotions. At this time, it is very likely that you want to pay off the mortgage early.
So, will the interest rate on existing housing loans be lowered next? After all, old users are also users.
▶ ▷ The fourth move: the central bank announced the establishment of 300 billion yuan of affordable housing re-loans to support local state-owned enterprises to purchase inventory commercial housing for affordable housing and low-rent housing.
Interpretation: Some time ago, the Politburo meeting of the Central Committee has set the tone, and the supply side is to "optimize inventory". Today's approach is to buy a house after the national team gets off the field. It is a bit similar to the "housing bank" we discussed earlier, that is, the establishment of a capital pool, the local purchase of inventory housing to establish affordable housing, and finally the realization of "home ownership".
Doubts: First, the destocking cycle of commercial housing in first-tier cities is 19.2 months, 21.6 months in second-tier cities, and 33.1 months in third- and fourth-tier cities. It can be seen that 300 billion yuan still seems to be a little less, how to solve the funding problem? At that time, one of the funding options that was discussed was to overhaul the provident fund system.
Second, the acquisition of commercial housing for affordable housing, according to the current acquisition information, the area is relatively small (such as less than 70 square meters), the rigid demand is strong, is the city "old and small" substitute. When these low-cost affordable housing flows into the market in large quantities, it may hit the rigid demand housing. At the same time, the rental cost of public rental housing is low, and for some groups who can buy or not, there is no need to buy a house.
At the end of the meeting, Vice Premier He Lifeng of the State Council delivered a speech, which involved digesting inventory and ensuring the delivery of buildings. The most important part is that for the first time, a thesis was put forward: "Deeply understand the people's nature and politics of real estate work." ”
Ding Jiangang, president of Zhejiang Daily Media Real Estate Research Institute, said: "This assertion sends a very clear signal to the outside world, and in essence, it is also to eliminate concerns for local governments to implement policies in the future. It also means that the policy can continue to be increased. ”
Combined with the above discussion, we will also list the corresponding questions:
1. Does increasing leverage now exacerbate risk?
2. Will the loan interest rate and existing mortgage interest rate be further reduced?
3. Should I repay the mortgage in advance if I buy a house?
4. Will the emergence of a large number of affordable housing impact the price of the just-in-demand housing market?
5. How to correctly understand the trend behind the important assertion of "people's nature"?
6. Which groups and regions will benefit from the new deal?
7. Will house prices rise sharply?
8. And the question we are most concerned about: the country has shouted, is it suitable to buy a house now?
We asked a few senior experts in the real estate field to hear their unique insights.
It is extremely unlikely that the national mortgage will move to zero interest rates.
Previously, the country adopted a dynamic adjustment mechanism for the first set of housing loan interest rate policy, and the sales price of newly built commercial residential buildings fell for three consecutive months month-on-month and year-on-year, and the lower limit of the local first home loan interest rate policy can be maintained, lowered or cancelled in stages, and the lower limit of the first home interest rate is based on the LPR, which is reduced by 20 basis points.
As of the end of April 2024, 75 of the country's 343 cities at and above the prefecture level have lowered the lower limit of the interest rate on the first home loan, and 67 have canceled the lower limit.
For reference, data from 58 Anjuke Research Institute shows that the current average first home loan in cities across the country is 3.59%, and the interest rate of second home loan is 4.16%.
After the current policy, the housing loan interest rate can be lowered by more than 20 basis points, especially the lower limit of the second home interest rate is more than the market expectation.
Judging from the policy statement alone, it is not ruled out that there may be a zero-interest rate house purchase in the future, but at the actual level, it is already a historic low in mortgage interest rates, and mortgages are also high-quality assets of banks, and banks are more motivated to give high-quality customers lower mortgage interest rates, but there is no reason to reduce the bottom limit.
In addition, many places have broken through the lower limit of the interest rate of the first home, and the space for adjustment in the short term is also limited.
At the same time, the reduction of interest rates, not only will not trigger a wave of "prepayment", but will reduce the possibility of repayment, because in the past two years, an important reason for this phenomenon is that the interest rate of the second home loan is significantly higher than the interest rate of many business loans and even consumer loans.
The real estate market has entered an extraordinary moment. The three major risks are juxtaposed (real estate market risk, local debt risk, and financial institution risk), and the policies of local governments have been unable to stabilize the market and expectations by relying only on one city and one policy. A package of policies must be introduced by the central government.
Credit exceeded expectations, especially lending policies, exceeding the level of the 2008 bailout.
First, there is no lower limit on interest rates. The absence of a lower limit opens up the imagination space, theoretically 1% or 2%, and from then on, each city can flexibly adjust according to its own actual situation, and the bank can flexibly adjust according to the actual situation of the lender.
Second, during the 2008 financial crisis, the down payment ratio for the first and second homes was 20% and 30% respectively, and now it is 15% for the first home and 25% for the second home.
This is also unprecedented.
Some may be concerned that the 15% down payment increases the leverage of residents.
Literally, it is to increase leverage, but in practice, because the interest rate has also entered a downward channel, and because of the competition between banks and cities, the interest rate in some cities may be unprecedentedly low in the future, so to a certain extent, the problem of increasing the amount of mortgage repayment caused by the decline in the down payment ratio has been eliminated.
To put it simply, many people will find that their current monthly payment may be similar to the amount they would have had to pay back in the past few years with a 30% down payment and a high interest rate.
It is undeniable that this has actually increased financial risks to a certain extent, but the current situation is that people with real demand and ability to buy houses need to be stimulated to speed up the real estate market, so as to alleviate the current trough situation, which is like heating up a water that is about to freeze, so that the entire industry and the economy can breathe a sigh of relief.
As for what some people are worried about, whether it will be heated to "water boiling", this is actually not realistic, on the one hand, the number of people with real needs is still limited, the flow is not large, the current idea is only to increase the flow rate.
On the other hand, there is no underlying foundation for the crazy rise, and the predicament of the real estate market this time is due to both the real estate itself and factors outside the real estate market, such as macroeconomics, people's perceptions (expectations and income), geopolitics, etc.
The improvement of internal causes can help the water temperature to 30 degrees or 40 degrees, but whether it can reach 70 degrees or even 100 degrees is affected by more factors, and it is difficult to judge at present.
More importantly, at the meeting, the senior management raised the real estate market to an unprecedented political height, and for the first time put forward the thesis of "deeply understanding the people's nature and politics of real estate work", which sent a very clear signal to the outside world, and in essence, it was also to eliminate concerns for the local government's future policies for the city.
It also means that the policy can continue to be increased.
From the perspective of the next three years, mortgage interest rates will continue to fall, and the current policies are not enough to stabilize the national property market, but they can boost the core areas of the core areas.
At present, the national weighted average mortgage interest rate is still relatively high, at about 3.65%, so in the future, new policies will continue to be introduced. I predict that by the end of this year or the first quarter of next year, the rate will fall below 3%, but this is not the end.
By the second half of next year, it is expected to fall below 2.5%, and from then on, China's real estate market will enter an "era of ultra-low interest rates", in fact, we can also see this trend from the 2.75% winning interest rate of ultra-long-term treasury bond issuance released on May 17.
In view of the continuous reduction of mortgage interest rates, in the future policy space, it is not excluded that a dynamic adjustment mechanism for existing housing loans will be set up like the first home, which can carry out additional discounts on the second and third rounds of stock housing interest rates and benefit all existing housing loans.
Compared with the boosting effect of lowering interest rates, the effect of 300 billion yuan of refinancing to support the collection of commercial housing as affordable housing is still relatively limited.
I'll do the math for you.
The refinancing of 300 billion yuan has an annual interest rate of 1.75% and a term of one year. In addition, the People's Bank of China (PBoC) is issuing re-loans according to 60% of the loan principal, so theoretically, the funds that major banks can lend abroad is 500 billion yuan.
Assuming that the down payment ratio of collection and storage is 20%, then the local government can use the principal of 100 billion yuan and the loan of 500 billion yuan, and the total amount of funds collected and stored is 600 billion yuan. Assuming that the storage house is 10,000 yuan/square meter (a 6% discount based on the megacity), 100 square meters, a total of 1 million sets, then the total storage scale is about 600,000 sets.
This scale, if concentrated in megacities and megacities, can still have some effect, but if it covers the whole country, on the one hand, there are many small and medium-sized cities that do not have so much demand for affordable housing.
On the other hand, rental returns in most cities are currently less than 2%. Even if it is calculated according to 2%, assuming that the house price is discounted by 6% at the time of acquisition, the rate of return can theoretically reach 3.33%, but the rent level of affordable housing will only be lower than the market price, if calculated at 50%, the rate of return is only 1.67%.
The central bank's relending rate for this financial institution is 1.75%, and the interest rate for financial institutions to lend to various governments is about 3.25%, and it is difficult to make a profit at this rate of return.
Therefore, the local government does this thing itself has no economic benefits, which is equivalent to the precipitation of funds to the local government, increasing the debt burden of the local government, but there will be social benefits, such as increasing the competitiveness of the city, attracting talents, etc., so only in the large cities with relatively high fiscal revenue and low debt pressure can the conditions and motivation to carry out.
Generally speaking, because the external attraction of large cities and megacities is very strong, there is also enough population increase and sufficient housing demand, so whether it is various policies such as interest rates or affordable housing, it is a greater benefit for them.
In the past few years, the central bank has implemented a "differentiated housing credit policy", that is, punitively making second homes pay higher interest costs, in order to prevent speculation, and at the same time, it has also inadvertently hurt a large number of improvement demand.
Now, the situation has long changed, and the recovery of the property market needs to be driven by improved demand. It is hoped that the central bank's "cancellation of the lower limit of mortgage interest rates for the first and second homes in the country" can be turned into low interest rates for the first and second homes in the process of implementation.
Another extremely critical initiative is that, according to Caixin, the Ministry of Housing and Urban-Rural Development, the State Administration of Financial Regulation, major state-owned banks and other ministries and agencies have set up joint working groups with key personnel in their respective real estate sectors.
Indeed, it is difficult for the Ministry of Housing and Urban-Rural Development to effectively undertake the task of property market recovery. Although the Ministry of Housing and Urban-Rural Development is a large ministry, its power is actually very limited. The four core elements of real estate - land, planning, finance and taxation - are not under the jurisdiction of the Ministry of Housing and Urban-Rural Development; Land and planning belong to the Ministry of Natural Resources, financing belongs to the People's Bank of China, the State Administration of Financial Supervision and the China Securities Regulatory Commission, and finance and taxation belong to the Ministry of Finance and the State Administration of Taxation.
Previously, we wrote an article suggesting the establishment of a central housing commission to horizontally connect different departments such as housing and construction, land, planning, finance, finance and taxation, market supervision, and statistics with strong coordination authority, so as to more effectively focus on building a new model of real estate development.
At present, the establishment of a joint real estate working group by multiple ministries and commissions, although there is still a gap from the "Central Housing Commission" we are talking about, is at least a positive development, and to a large extent, it can avoid the disadvantage of the Ministry of Housing and Urban-Rural Development due to the repeated misjudgment of the situation and the distortion of actions due to single-department operations.
The author of this article | Xu Tao | And the wind and the moon and a half | Editor-in-Charge | He Mengfei
Editor-in-Chief | He Mengfei | Image source | VCG