Xinhua News Agency, Beijing, Sept. 25 (Xinhua) -- The new deal on real estate finance is coming, and what is the impact of the policy combination?
Xinhua News Agency reporters Wu Yu, Guo Yujing, Li Xiaoting
A new round of financial measures to support real estate has been released: guiding banks to reduce the interest rate of existing housing loans, unifying the minimum down payment ratio of housing loans to 15%, optimizing the refinancing policy for affordable housing, and supporting the acquisition of land stock of real estate enterprises...... What are the considerations for wielding a combination of real estate financial policies at this time? What will be the impact of the new policy?
On the 24th, at the press conference of the State Council New Office, Pan Gongsheng, governor of the People's Bank of China, announced five real estate financial policies. This made many market participants shout: exceed expectations!
The picture shows the press conference held by the Information Office of the State Council in Beijing on September 24. Photo by Xinhua News Agency reporter Li Xin
To improve the real estate financial policy, we must start from both ends of supply and demand. In terms of stimulating effective demand, the People's Bank of China once again announced a reduction in the interest rate of existing housing loans, and unified the minimum down payment ratio for first and second home loans.
In August last year, the People's Bank of China also pushed commercial banks to reduce the interest rate of existing housing loans, and the adjusted interest rate of the first home loan fell by 0.73 percentage points on average. However, after the last cut, the interest rate of many existing mortgages is still around 4%.
As the interest rate of new loans continues to fall, the spread between new and old mortgages continues to widen, especially in cities with higher increases, such as Beijing, Shanghai, Shenzhen, Guangzhou, etc., where the spread between new and old mortgages is even larger.
For this round of batch adjustments, Pan Gongsheng said that it is planned to guide banks to reduce the interest rate of existing housing loans to around the interest rate of newly issued housing loans, which is expected to decrease by about 0.5 percentage points on average.
Knowing that the interest rate of the existing mortgage will be adjusted again, Mr. Sun, who lives in Wangjing, Beijing, is quite concerned. In the last round of stock mortgage adjustments, his loan interest rate was lowered to 4.75% due to the lower limit of Beijing's first home loan interest rate policy.
"The lower limit of the interest rate for the first home loan issued in Beijing is now 3.4%, which is more than 1 percentage point away from my mortgage interest rate. Even if it only drops by 0.5 percentage points, I can pay about 1,600 yuan less every month. Mr. Sun made a calculation.
Zhang Dawei, chief analyst of Centaline Real Estate, said that if the commercial loan is 1 million yuan and the equal principal and interest for 30 years are calculated, the mortgage interest rate will drop by 0.5 percentage points, and the borrower's monthly payment will be reduced by about 280 yuan, and the interest expense can be reduced by more than 100,000 yuan in 30 years.
As of the end of June, the balance of personal housing loans in mainland China was 37.79 trillion yuan. Pan Gongsheng made it clear that the decline in the interest rate of the existing housing loan will benefit 50 million households and 150 million people, and the total annual reduction of household interest expenses will be about 150 billion yuan.
Dong Ximiao, chief researcher of Zhaolian, said that lowering the interest rate of the stock mortgage is conducive to further reducing the interest expense of the borrower's mortgage, reducing the prepayment behavior, and can also compress the space for illegal replacement of the stock of the mortgage, so as to maintain the stable and healthy development of the real estate market.
In addition to alleviating the interest pressure on mortgage borrowers, the financial management department has also unified the minimum down payment ratio for first and second home loans. The down payment ratio for second homes has also dropped to 15%, a new low in recent years.
Mr. Yuan, a resident of Chongqing's Liangjiang New District, recently fell in love with an improved housing unit in the Central Park area. "The second child in the family is about to be born, and the original house is not enough to live in, so I want to buy another four-room apartment." Mr. Yuan told reporters that if the minimum down payment ratio for the follow-up second home loan is lowered from 25% to 15%, the down payment can save at least 235,000 yuan.
"Adjusting the housing finance policy from the two aspects of mortgage interest rate and down payment ratio will help lower the threshold for residents' housing consumption, reduce the interest burden, and promote the expansion of consumption and investment." Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that localities can also set the minimum down payment ratio in their jurisdictions according to their policies. In addition, 15% is only the minimum down payment ratio, and whether it can be implemented according to the minimum down payment ratio depends on the risk profile of the customer.
The site of a real estate project photographed in Jiading District, Shanghai, in May 2024. Photo by Xinhua News Agency reporter Zheng Juntian
While supporting residents to buy houses from the demand side, the financial management department has also launched a number of policy measures that are favorable to the supply side.
Pan Gongsheng introduced that the phased policies such as the extension of housing stock financing and operating property loans were originally due to expire at the end of this year, and the People's Bank of China and the State Administration of Financial Supervision decided to extend these two policies until the end of 2026.
According to industry experts, extending the term of some real estate financial policies will help further revitalize the stock assets of real estate enterprises and improve the cash flow of real estate enterprises.
Revitalizing the housing stock is the key to resolving real estate risks. This time, the People's Bank of China also further optimized the affordable housing refinancing policy, which attracted widespread attention in the market.
In May this year, the People's Bank of China announced the establishment of a 300 billion yuan re-loan for affordable housing, guiding financial institutions to support local state-owned enterprises in acquiring completed and unsold commercial housing at reasonable prices in accordance with the principles of marketization and rule of law.
"In order to further enhance the market-oriented incentives for banks and acquisition entities, we will increase the proportion of financial support from the People's Bank of China in the affordable housing relending policy from the original 60% to 100%, and accelerate the process of destocking commercial housing." Pan Gongsheng said.
Dong Ximiao believes that increasing the proportion of financial support from the People's Bank of China to 100% will help increase the enthusiasm of commercial banks and local state-owned enterprises and accelerate the process of destocking commercial housing. This move will also help further increase the supply of affordable housing and promote the establishment of a new model for the transformation and development of the real estate industry.
In addition, in terms of supporting the acquisition of land stock of housing enterprises, the People's Bank of China proposed that on the basis of using some local government special bonds for land reserves, it would study allowing policy banks and commercial banks to lend loans to support qualified enterprises in the market-oriented acquisition of land for housing enterprises.
Pan Gongsheng said that this move will help revitalize the stock of land and ease the financial pressure of real estate enterprises, "when necessary, the People's Bank of China can also provide re-lending support."
With the major changes in the relationship between supply and demand in China's real estate market, financial measures have also been continuously adjusted and optimized to adapt to the situation, on the one hand, continue to increase support for rigid and improved housing demand, and on the other hand, prevent real estate risk spillover.
"This round of real estate financial policies has been increased again, and the consistent policy orientation has not changed, and the convergence of the old and new policies has been steady and orderly." Wen Bin, chief economist of China Minsheng Bank, said that the increase in financial policy support has comprehensively helped stabilize the stock and promote the increment, sending a clear signal to stabilize the real estate market.
Source: Xinhua News Agency