What will be the impact of the new round of real estate financial policies?

What is the impact of the new round of real estate financial policy combination?

On May 17, a new round of financial measures to support real estate was released: the lower limit of the mortgage interest rate policy at the national level was clearly cancelled, the down payment ratio of housing loans and the interest rate of provident fund loans were lowered, and the planned establishment of affordable housing refinancing ...... What are the considerations for swinging the real estate financial policy combination punch at this time? What will be the impact of the new policy "toolbox"?

Lower the threshold for residents to buy houses and boost housing consumption

The People's Bank of China and the State Administration of Financial Supervision and Administration jointly issued a notice on the 17th, reducing the minimum down payment ratio of the first and second home loans to no less than 15% and not less than 25% respectively. The People's Bank of China also announced that it would remove the lower limit of the first and second home loan interest rate policy at the national level, and reduce the interest rate of personal housing provident fund loans.

"Adjusting the housing finance policy from the two aspects of down payment ratio and mortgage interest rate can appropriately lower the threshold for residents' housing consumption and reduce the burden of residents' housing consumption." Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that after the adjustment, the down payment ratio for the first home has reached the lowest level in history, and the down payment ratio for the second home has also hit a new low in recent years.

In the view of industry insiders, the cancellation of the lower limit of the national mortgage interest rate policy and the reduction of the personal housing provident fund loan interest rate by 0.25 percentage points will promote the continued reduction of housing loan interest rates.

Since the implementation of the dynamic adjustment mechanism for the first home loan interest rate policy, more and more cities have lowered or cancelled the lower limit of the first home loan interest rate due to the city's policies. The reporter learned that as of the end of April this year, 67 of the country's 343 cities have canceled the lower limit of the first home loan interest rate. At present, except for a few first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, the lower limit of mortgage interest rates in most cities has dropped to a unified national level.

Sales office of a new real estate outside the North Fifth Ring Road in Beijing. Photo by Xinhua News Agency reporter Wang Youling

Industry insiders expect that after the policy adjustment, more cities will cancel the lower limit of mortgage interest rates, and the independent pricing space of individual hot cities that retain the local lower limit will also be significantly expanded. After the policy is implemented, mortgage interest rates in most cities may fall by 0.3 to 0.4 percentage points. According to the calculation of 1 million yuan loan, 30-year term, and equal principal and interest repayment, the total interest expense can be reduced by more than 70,000 yuan.

Dong Ximiao, chief researcher of Zhaolian, said that the adjustment of the housing finance policy was larger, exceeding expectations, sending a clear signal to stabilize the real estate market, helping to stabilize housing consumption confidence and improve residents' willingness and ability to consume housing.

The new policy "toolbox" supports the revitalization of housing stock

Revitalizing the housing stock is the key to resolving real estate risks. The People's Bank of China's plan to set up affordable housing refinancing has attracted great attention from the market.

According to reports, the proposed affordable housing reloan will have a scale of 300 billion yuan, an interest rate of 1.75%, a term of 1 year, and a period of 4 extensions. The recipients include 21 national banks, including the China Development Bank, policy banks, state-owned commercial banks, postal savings banks, and joint-stock commercial banks.

Tao Ling, deputy governor of the People's Bank of China, said that the establishment of affordable housing refinancing can encourage and guide financial institutions to support local state-owned enterprises in purchasing completed and unsold commercial housing at reasonable prices in accordance with the principles of marketization and rule of law, and use them as allocated or rented affordable housing. The People's Bank of China will issue reloans according to 60% of the loan principal, which is expected to drive bank loans of 500 billion yuan.

Dong Ximiao said that the People's Bank of China issued reloans according to 60% of the loan principal, and the reloan funds are to be repaid, not subsidies to enterprises, which is not equivalent to the government's "free bailout". Financial institutions independently decide the conditions for granting loans based on the applications of local state-owned enterprises, and only after obtaining qualified loans can they apply for reloans from the People's Bank of China.

The reporter learned that the People's Bank of China clearly stated that the refinancing of affordable housing will not increase the hidden debt of local governments. Local state-owned enterprises are selected by the city government, and the selected local state-owned enterprises and their affiliated groups are not allowed to be government financing platforms, and the acquisition funds are recovered through leasing operating income and future housing sales income.

The reporter learned from the preliminary investigation that state-owned enterprises in Zhengzhou, Nanjing, Zhuhai and other places have taken the lead in the trial, through direct acquisition, trade-in and other ways to participate in the stock of housing to inventory, the current announced plans to purchase more than 10,000 housing units.

Tao Ling said that this policy can promote the destocking of the commercial housing market, accelerate the supply of affordable housing, and help promote the implementation of the work of guaranteeing the delivery of buildings and the coordination mechanism of urban real estate financing. With the support of the re-lending policy, after real estate enterprises sell the completed commercial houses, the funds can be used to continue the construction of projects under construction and improve the financial situation of real estate enterprises.

Steady convergence of policies to promote the transformation of real estate to a new model

From the establishment of a dynamic adjustment mechanism for the interest rate policy of the first set of housing loans, to the reduction of the interest rate of the first home loan in stock, to the launch of a new round of real estate financial policy combinations...... With the major changes in the relationship between supply and demand in the mainland real estate market, financial measures have also been adjusted and optimized to meet the needs of the situation.

In the view of industry insiders, the real estate financial policy is in the same line, and the new and old policies are connected in a steady and orderly manner, on the one hand, we will continue to increase the support for rigid and improved housing demand, and on the other hand, we will prevent the spillover of real estate risks.

"This round of policy adjustments has been relatively strong, but it has not changed the consistent policy orientation." Wen Bin, chief economist of China Minsheng Bank, believes that although the restrictions on mortgage interest rates are basically relaxed, the down payment ratio of the first and second homes is still differentiated, and the first home is significantly lower. In addition, in accordance with the principle of city-specific policies, it is expected that the lower limit of mortgage interest rates will be retained in some hot cities for the time being. These will help to balance the current stability and long-term development of the real estate market, and avoid reverting to the old path of "relying on real estate to drive the economy".

The meeting of the Political Bureau of the CPC Central Committee held on April 30 proposed to study the policies and measures to digest the stock of real estate and optimize the incremental housing, and pay close attention to building a new model of real estate development to promote the high-quality development of real estate.

Experts said that the optimization and adjustment of the housing loan policy is an implementation and positive response to the relevant deployment of the Political Bureau of the Central Committee. The People's Bank of China chose to issue relevant policies at this time, and there are also considerations to support steady credit growth. In the future, housing loans will still be high-quality assets for banks, which can make up for the reduction in interest income from the decline in loan interest rates to a certain extent, which is conducive to stabilizing the net interest margin of banks.

Zeng Gang believes that in the process of policy optimization and adjustment, the principle of marketization has been emphasized many times, which reflects the clear idea of market-oriented adjustment of the financial management department. With the continuous enhancement of the endogenous driving force of the mainland economy and the continuous optimization of the ability of financial resources allocation, the real estate sector can also be more regulated by the market mechanism, which will promote the acceleration of the transformation of real estate enterprises to a new development model.

Reporter: Wu Yu

Source: Xinhua News Agency