From March 1, the conversion of pricing benchmark of stock floating rate loan contract was officially launched. This huge anchor replacement project involving the scale of millions of stock loans is planned to be completed in half a year, and the conversion of pricing benchmark is also required for personal housing mortgage loans related to peoples money bags.
Recently, the banks issued detailed rules for the conversion of the benchmark price of personal mortgage interest rates through official website and official WeChat official account. Because the conversion rules are more complex and professional, some netizens called every word is understood, but they dont even know what it means to connect up.
In the process of conversion of pricing benchmark of personal housing loan interest rate, the most concerned issues are mainly focused on why to convert, which channels can be converted, what changes will happen to personal housing loan interest expenditure after conversion, and when the conversion is appropriate, etc. here, securities companies in China sort out the strategies of detailed popular version, first look at the following points:
1. The loan contract changes involved in the pricing benchmark conversion mainly include the new pricing benchmark (LPR or fixed interest rate), repricing date (generally January 1 of the next year or the annual date corresponding to the loan disbursement date), repricing cycle (the shortest is 1 year, which is one year by default when many banks handle online channels).
2. For loans with joint borrowers, the conversion application shall be submitted by the main borrower, and all joint borrowers shall be confirmed before it becomes effective.
3. During the outbreak, the bank encouraged customers to handle through mobile banking, online commercial banks and other online channels. Some banks set up a one key conversion fast channel to facilitate customer conversion. There is no additional charge for the conversion work.
4. The conversion of pricing benchmark lasts for half a year, from March 1 to August 30.
5. For mortgage customers, given that there is still room for LPR to decline this year, early conversion will benefit early.
Question 1: why should the pricing benchmark of personal housing loan interest rate be changed? Whats the situation?
This is actually an important arrangement of the central bank in the reform of interest rate liberalization. In August 2019, the central bank reformed the loan market quotation rate (LPR). Since then, the pricing benchmark of new loans has changed from the loan benchmark rate to LPR. Since March this year, the application scope of LPR has gradually expanded from new loans to stock floating rate loans, and the benchmark interest rate of loans has gradually withdrawn from the historical stage.
According to the announcement of the central bank, the stock floating rate loan refers to the floating loan interest rate of the loan that has been issued before January 1, 2020 and the benchmark interest rate of the reference loan that has signed the contract but has not been issued.
According to the regulations of the central bank, commercial banks should officially switch the pricing benchmark of stock floating rate loans with stock loan customers from March 1, 2020. In principle, the switching of pricing benchmark of stock loan interest rate should be completed before August 31, 2020. That is to say, in the next six months, the contract of stock floating rate loan will complete the conversion of pricing benchmark.
There are two options for pricing benchmark conversion: LPR or fixed interest rate. The specific choice can be determined by the borrower through consultation with the bank, and individual mortgage customers can choose freely. However, the borrower has only one option and cannot convert again after conversion.
However, the stock floating rate loan does not need to be converted. The stock floating rate loan that is in the last repricing cycle can not be converted. Considering that the repricing cycle of most floating rate loan contracts is one year at present, if your loan contract still has one year to maturity, this pricing benchmark switch can not be involved.
For mortgage customers, the following situations do not need to participate in the conversion work:
1. There is no need to convert the individual housing loan (including the provident fund part of the portfolio loan) of policy provident fund;
2. Personal housing loans due before December 31, 2020 do not need to be converted;
Question 2: what is the change of interest expenditure after the conversion of the pricing benchmark of mortgage interest rate? When is the conversion cost-effective?
If conversion to fixed interest rate is selected, the converted interest rate level is equal to the current implementation interest rate level of the original contract, and the interest rate level is fixed for the remaining term of the contract.
If conversion to LPR is selected, the actual loan interest rate after conversion = LPR quotation closest to the repricing date + plus point value.
Note that the value of the adding point is fixed once it is determined! What can affect your final loan interest rate level is the LPR quotation closest to the repricing date.
One of the tips is to pay attention to. Since the repricing cycle of loans is as short as one year after the conversion of pricing benchmark, considering that there is still downward space for LPR quotation this year, it is recommended that you switch early and benefit early.
For example, your previous mortgage issuance date was May 1, 2010, and the repricing date will remain unchanged at May 1 of each year at the time of this pricing benchmark conversion. Then, if you change the pricing benchmark to LPR before May 1, you can reprice for the first time on May 1 this year, and calculate the actual loan interest rate according to the latest LPR (LPR published on April 20, 2020). However, if you choose to change the pricing benchmark after May 1, you can only reprice for the first time on May 1, 2021. Before that, the actual interest rate of the loan is still at the latest interest rate level of the original contract, and you cant enjoy the interest rate reduction brought by LPR.
Generally speaking, after the conversion of the pricing benchmark and before the first repricing, the interest expense of the mortgage is the same as that of the original contract. But considering that this year and in the future, the approximate rate of LPR will gradually decline. No matter whether you enjoy a 70% discount mortgage or a 10% rise, the conversion of pricing benchmark can at least bring you benefits of reducing interest expenditure in the near future, and the early conversion will benefit you. No one can predict whether LPR will rise or fall after 20 or 30 years.
Question 3: which channels can be converted?
For details, you need to query the official website or official wechat of the loan bank. However, according to the announcements of multiple banks, before August 30, the mortgage customers can basically complete the conversion of pricing benchmark in the mobile banking, online banking, smart teller machine, SMS banking, any outlet and other channels of the loan bank.
In view of the impact of the epidemic, banks recommend customers to choose mobile banking and other online operation methods to complete, and some banks have opened a fast channel for one key conversion in mobile banking app.
As for the required materials, the basic requirement is the original ID card. When I handle it, I need to bring the original of my ID card; when I entrust others to handle it, I need the original of valid ID card and notarization power of attorney of the trustee. It should be noted that the pricing benchmark conversion is an operation provided by the bank for the customer free of charge, and the customer does not need to pay any additional fees.
Question 4: do joint borrowers need to be confirmed?
Bank of China requires that for loans with joint borrowers, the conversion application shall be submitted by the main borrower, and all joint borrowers shall confirm within 7 days from the second day when the main borrower submits the application.
It is worth noting that even if the co borrower does not have the bank card of the lender, the bank card of other banks can be used to register the mobile banking app of the lender and handle the pricing benchmark conversion.