Photo Source: Photographs taken by journalist Zhang Jianjian
At about 17:18 on Sunday, the central bank issued a heavy policy on mortgage interest rates, and the era of mortgage loans with benchmark lending rate as a yardstick was completely over!
The Peoples Bank of China announcement No. 16 (2019) shows that in order to firmly implement the positioning of houses are for living, not for speculation and the long-term management mechanism of the real estate market, in the process of reforming and improving the formation mechanism of the loan market quotation rate (LPR), we should ensure the effective implementation of the regional differential housing credit policy and maintain individuals. The interest rate of housing loans is basically stable and the legitimate rights and interests of both borrowers and lenders are safeguarded. At the same time, the head of the central bank also answered questions from reporters on the interest rate of personal housing loans.
Each warp knitting (micro-signal: nbdnews) collates four core points as follows:
1. The pricing of loan interest rates has changed drastically. In the past, with reference to the benchmark lending interest rate rising or falling by a certain proportion, it has now become formed with the LPR of the corresponding period of the latest month as the benchmark plus point of pricing. (What is LPR is explained in detail later)
2. The interest rate of the first suite loan shall not be lower than LPR, and that of the second suite shall not be lower than LPR+60 basis points. According to this calculation, the LPR over 5-year period on August 20 is 4.85%, that is, the first house interest rate should not be less than 4.85%, and the second house loan interest rate should not be less than 5.45%, which is basically equivalent to the actual minimum interest rate of the existing mortgage. On the basis of this principle, the specific situation depends on the local real estate regulatory demand and bank pricing.
3. Once the number of additional points is determined, the contract period will not be changed; however, the loan client can agree with the bank on how to redistribute the interest rate of the LPR, and the shortest one can be adjusted once a year.
4. The new policy will be implemented on October 8, 2019; the previous loans will still be implemented according to the old policy, and the provident fund will not be adjusted for the time being.
Central Bank: Interest Expenditure on Individual Housing Loan is basically unaffected
The following is the Peoples Bank of China bulletin No. 16 :
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.
What is LPR?
Loan Prime Rate (LPR)
It is the loan interest rate that commercial banks execute on their best customers, on which other loan interest rates can be generated by adding or subtracting points. The centralized quotation and issuance mechanism of loan market quotation rate is to designate the issuer to calculate the quotation rate on the basis of the quotation banks own quotation rate of the loan market quotation rate, and to form the average quotation rate of the loan market quotation rate of the quotation bank and publish it to the outside world. At present, the interest rates quoted in the market for loans of one year and more than five years are announced to the public.
The loan market quotation rate (LPR) quotation group is currently composed of 18 commercial banks. On the basis of the original 10 national banks, we have increased the number of urban commercial banks, rural commercial banks, foreign banks and private banks to 18. The new quotation banks are all small and medium-sized banks with large influence in the loan market, strong loan pricing ability and better service effect for small and micro enterprises in the same type of banks, which can effectively enhance the representativeness of LPR. The self-regulation mechanism of market interest rate pricing determines and adjusts the members of quotation bank according to relevant documents, supervises and manages the operation of quotation rate in loan market, and standardizes the behavior of quotation bank and designated issuer. The Peoples Bank of China authorizes the National Interbank Borrowing Center to be the designated issuer of quoted interest rates in the loan market. Before 9:00 a.m. on the 20th of each month (in case of delayed holidays), with a step of 0.05 percentage points, the offer is submitted to the National Interbank Borrowing Center. After removing the highest and lowest quotations, the National Interbank Borrowing Center calculates the LPR from the arithmetic average to the nearest integer multiple of 0.05%. The LPR is announced at 9:30 on the same day and can be published nationwide by the public. Interbank lending center and the Peoples Bank of China website query.
Housing loan, interest expenditure is basically unaffected
The following is the central banks answer to journalistsquestions:
1. What is the background of the announcement?
The interest rate of individual housing loan is an integral part of the loan interest rate system. In the process of reforming and perfecting the formation mechanism of loan market quotation rate (LPR), the pricing benchmark of individual housing loan also needs to be converted from the benchmark interest rate of loan to LPR in order to play a better role in the market. At the same time, the interest rate of individual housing loan is also an important part of the long-term management mechanism of the real estate market and the regional differential housing credit policy. by
Implement the positioning of house is for living, not for frying
And the long-term management mechanism of the real estate market, to ensure the smooth and orderly conversion of pricing benchmarks, to maintain the basic stability of the interest rate of personal housing loans, to safeguard the legitimate rights and interests of both borrowers and lenders, the Peoples Bank of China issued a bulletin to clarify the relevant issues of the adjustment of the interest rate of personal housing loans.
2. How to price the interest rate of personal housing loan after the reform?
After the reform, the interest rate of newly issued commercial personal housing loans was formed with the LPR of the corresponding period of the last month as the pricing benchmark plus point. Among them, LPR is formed by the quotation of interest rate quotation bank in loan market. The specific incremental value of each loan shall be agreed upon by the lending bank in accordance with the requirements of the national and local housing credit policies, taking into account the loan risk situation, and negotiating with the borrower when issuing the loan. Once the Added-Point value is determined, it will remain unchanged throughout the contract period.
3. How to understand the corresponding period when determining the pricing benchmark?
At present, LPR has one-year and more than five-year varieties. Individual housing loan interest rates for one-year and more than five-year periods have a direct corresponding benchmark. The benchmark of individual housing loan interest rates for one-year and one-to-five-year periods can be chosen by the lending bank independently between the two types of term. After the reference benchmark is determined, the term spread factor can be reflected by adjusting the Added-Point value.
4. What is interest rate revaluation?
Interest rate revaluation refers to that the loan bank determines the new loan interest rate level according to the change of the pricing benchmark according to the calculation method stipulated in the contract. The announcement specifies that the period of interest rate redistribution for individual housing loans can be agreed upon by both parties through consultation, the shortest being one year and the longest being the contract term. Borrowers and lending banks can choose according to their own interest rate risk bearing and management capabilities. Each time the interest rate is re-priced, the pricing benchmark is adjusted to the LPR of the corresponding period of the last month.
5. What impact does it have on households?
The announcement mainly aims at the newly issued interest rate of personal housing loan, and the interest rate of the stock personal housing loan is still implemented according to the original contract. After the conversion of the pricing benchmark, the interest rate of the first set of new individual housing loans issued nationwide shall not be lower than the corresponding term LPR (4.85% according to the LPR above the 5-year period of August 20); the interest rate of two sets of individual housing loans shall not be lower than the corresponding term LPR plus 60 basis points (5.45% according to the LPR above the 5-year period of August 20), which is in line with the current situation of individual housing loans in China. Inter-minimum interest rates are basically the same. At the same time, the branches of the Peoples Bank of China will guide the provincial market interest rate pricing self-regulation mechanism to determine the local LPR plus point lower limit in time. Compared with before the reform, when households apply for personal housing loans, the interest expenditure is almost unaffected.
6. When will it be implemented?
October 8, 2019 is the conversion day of pricing benchmark.
Before that, loan banks need to modify loan contracts, upgrade systems, organize staff training, and take various ways to do a good job of publicity and interpretation for customers to ensure that the transformation process is smooth and orderly. By October 8, 2019, loans that have been granted and signed but have not been granted are still executed in accordance with the original contract.
Securities Research Newspaper: High-quality enterprises will benefit more
According to Guokai Securities Research Report, the new LPR design will lead to intensified competition among banks, which will benefit high-quality enterprises more:
1. This LPR reform is a concrete manifestation of interest rate marketization, mainly in reducing the risk premium in the real interest rate.
As early as the first quarter, President Yi Gang said that the main way to reduce the real interest rate in the future is to reduce the risk premium. The interest rate marketization reform is to eliminate monopoly factors through the interest rate merger so as to make risk pricing more accurately. After the reform, the risk premium is expected to follow the decline due to the breakdown of some previously hidden factors.
2. The pressure of commercial banks has increased, which needs further care from the central bank.
After the LPR reform, on the one hand, the pricing power of commercial banks to enterprises is weakened, and the bargaining space of large enterprises will be increased when they get loans; on the other hand, considering that one-year MLF is the most important channel for commercial banks to obtain medium-term liquidity, when its interest rate becomes the benchmark for loans, the central bank will also take two aspects of quantity and price. Strengthen policy constraints on commercial banks. Since LPR reform has exacerbated the pressure on commercial banks to some extent, if the central bank does not follow up on certain measures, commercial banks may be reluctant to lend, so the importance of subsequent reduction and replacement of MLF and TMLF will be more prominent.
3. Cost reduction effect or in the medium term.
This LPR reform is only one step in the interest rate marketization reform, and its policy effect may not be obvious until the medium term. LPR is still aimed at big banks from both quotation and MLF availability. The liquidity availability of small and medium-sized banks has not been effectively improved. Under the liquidity stratification, they still face the possibility of repeated credit risks. If they cover this cost by adding LPR points, the short-term impact on real cost reduction may be limited.
4. The bond market will be more sensitive to the follow-up adjustment of MLF.
With the central banks introduction of this policy, the market will easily reinforce the expectation that interest rates will fall further, so in the short run, it will be more favorable for the bond market. At the same time, we need to note that the market will be more sensitive to the follow-up adjustment of MLF. If the central bank lowers the open market interest rate, the short-end interest rate space opens, then the follow-up long-end interest rate will still have downward space; if this expectation falls, the interest rate will rebound.
Wen Bin, chief researcher of Minsheng Bank, once said that under the background of abundant liquidity and reasonable liquidity, the banks capital is relatively abundant. Under the condition that the one-year interest rate of MLF remains unchanged, the one-year interest rate of LPR formed by adding points should be lower than the current LPR. After the one-year decline of LPR, the real interest rate of new loans may also decline.
Through the market-oriented reform of interest rate and the realization of the integration of interest rate, the financing cost of enterprises will eventually be reduced.