Central Banks Adjustment of Interest Rate Policy on Housing Loans: Formation of an Additional Point Based on LPR Pricing Benchmark

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 Central Banks Adjustment of Interest Rate Policy on Housing Loans: Formation of an Additional Point Based on LPR Pricing Benchmark


In order to firmly implement the orientation of housing is for living, not for speculation and the long-term management mechanism of the real estate market, in the process of reforming and perfecting the formation mechanism of the loan market quotation rate (LPR), we should ensure the effective implementation of the regional differential housing credit policy, maintain the basic stability of the interest rate of individual housing loans, and maintain it. The legitimate rights and interests of both borrowers and lenders are announced as follows:

1. Since October 8, 2019, the interest rate of newly issued commercial personal housing loans has been formed with the quotation rate of the loan market for the corresponding period of the latest month as the base plus point of pricing. The added value should meet the national and local housing credit policy requirements, reflect the loan risk situation, and the contract period should be fixed and unchanged.

2. When a borrower applies for a commercial personal housing loan, he may negotiate with a banking financial institution to agree on a period of interest rate revaluation. The minimum period of revaluation is one year. The interest rate rebalancing date and the pricing benchmark are adjusted to the loan market quotation rate for the corresponding period of the latest month. The period of interest rate revaluation and the way of adjustment should be specified in the loan contract.

3. The interest rate of the first commercial individual housing loan shall not be lower than the quotation rate of the corresponding term loan market. The interest rate of the second commercial individual housing loan shall not be lower than the quotation rate of the corresponding term loan market plus 60 basis points.

Fourthly, the provincial branches of the Peoples Bank of China should guide the self-regulation mechanism of interest rate pricing in provincial markets according to the principle of implementing policy according to the city, and on the basis of the unified national credit policy and according to the changes of the local real estate market situation, determine the lower limit of the first set and two sets of commercial personal housing loan interest rates in their jurisdiction.

Fifthly, banking financial institutions should clarify the pricing rules of commercial individual housing loan interest rate according to the lower limit of the added point determined by the self-regulation mechanism of interest rate pricing in each provincial market, combined with the operation situation of the institution, customer risk situation and credit conditions, and reasonably determine the specific added point value of each loan.

6. Banking financial institutions should earnestly provide policy publicity, explanation and consultation services, guarantee the contractual rights of borrowers and consumersrights and interests according to law and regulations, strictly prohibit the provision of mortgage refinancing and mortgage refinancing services for personal housing loans, and ensure the smooth and orderly progress of relevant work.

7. Prior to October 8, 2019, commercial individual housing loans issued and commercial individual housing loans that have signed contracts but have not been granted shall still be implemented as stipulated in the original contract.

8. The interest rate of commercial housing purchase loan shall not be lower than the quotation rate of corresponding term loan market plus 60 basis points. The interest rate policy of individual housing loan of provident fund will not be adjusted for the time being.

Source: Responsible Editor of the Peoples Bank of China: Xing Haibo_NBJS8850