Xinhua News Agency, Beijing, December 21 (Xinhua) -- "China ** Daily" published an article on the 21st titled "December LPR "Hold Still" and There is a Moderate Downside Space in the Follow-up". According to the article, the People's Bank of China authorized the National Interbank Lending Center to announce that the loan market ** interest rate (LPR) on December 20: 1-year is 345% and 4 for more than 5 years2%, both unchanged from the previous month. This is the fourth consecutive month that the LPR has been "on hold" since the reduction in August this year.
Experts believe that the cumulative effect of the LPR reduction since the beginning of this year is emerging, which strongly supports the economic recovery. In order to promote the steady and moderate decline of social comprehensive financing costs, there is still moderate room for LPR to decline in the future.
Source**, Xinhua News Agency).
Subheading) is caused by multiple factors.
The LPR continued to 'stay put' in December, mainly due to factors such as the medium-term lending facility (MLF) policy rate remaining unchanged, market interest rates continuing to run at a high level, and banks' net interest margins continuing to be under pressure. Wen Bin, chief economist of Minsheng Bank, said.
The MLF interest rate is the pricing anchor of the LPR, and its changes will have a direct and effective impact on the LPR. On December 15, the People's Bank of China continued to increase the parity of 650 billion yuan of MLF, and the winning interest rate remained at 275% unchanged, so that the room for LPR reduction in December has been greatly reduced.
At present, the market interest rate continues to run at a high level, with DR001 (1-day bond collateral repo rate in the interbank market) and DR007 (7-day bond collateral repo rate in the interbank market) at 16% and 18% around. Wang Qing, chief macro analyst of Oriental Jincheng, believes that in the context of the recent large-scale issuance of ** bonds, although the People's Bank of China continued to increase the amount of MLF in November and December, the overall market capital is still tight. This means that the wholesale financing costs of banks in the money market have risen significantly recently, which will weaken the motivation of the first bank to take the initiative to lower the LPR markup.
In addition, commercial banks' net interest margins remain under pressure. Wen Bin believes that it is difficult to change the pressure on banks' net interest margins in the short term, and the momentum and space for LPR** to continue to decline are limited.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said that the macroeconomic data in November showed that China's domestic needs to be repaired steadily, the performance of real economy loans and social finance exceeded expectations, and credit grew steadily and moderately, reflecting that the interest rate of the loan market is in a reasonable range, and the urgency of LPR reduction in the short term is not high.
Subheading) The cumulative effect is emerging.
Looking at the trend of LPR since the beginning of this year, the 1-year and 5-year LPR have been reduced by 20 basis points and 10 basis points respectively. It has promoted the further decline of loan interest rates for enterprises and residents, and the cumulative effect of enhancing the investment and consumption momentum of enterprises and residents is emerging.
In terms of corporate lending rates, the rate has fallen to a historic low. According to data from the People's Bank of China, the interest rate on corporate loans from January to November was 389%, down 03 percentage points, which continued to remain at a historical low since the beginning of statistics, effectively enhancing the momentum for the recovery of the real economy.
From the perspective of mortgage interest rates, the decline is obvious. According to the "Report on the Implementation of China's Monetary Policy for the Third Quarter of 2023", in September 2023, the weighted average interest rate of new personal housing loans was 402%, down 032 percentage points. As of the end of September, the interest rate of more than 22 trillion yuan of existing housing loans has been lowered, and the adjusted weighted average interest rate is 427%, with an average decrease of 73 basis points;At the same time, among the 343 cities (prefecture level and above) in the country, 119 cities that meet the conditions for relaxing the lower limit of the first home loan interest rate policy have relaxed the lower limit.
It is worth noting that as the New Year approaches, some existing mortgages will also usher in repricing. If a homebuyer chooses a repricing date of January 1, the mortgage rate will be reduced by 10 basis points on January 1 of the following year, based on the reduction of the LPR of more than 5 years. If you take a commercial loan of 1 million yuan and 25 years of equal principal and interest repayment as an example, you can save 5767 yuan, a year saving 69204 yuan.
The downside is expected to narrow.
* The Economic Work Conference proposed to promote a steady and moderate decline in the cost of comprehensive social financing. Experts believe that this means that there is still room for moderate downward movement of LPR in 2024, which will push financing costs down and activate the demand for production and consumer credit.
According to Wang Qing's analysis, under the expectation that the price level will remain low, with a view to boosting domestic demand and supporting the resolution of local debt risks, the People's Bank of China will have room to cut interest rates and reserve requirements in 2024. Based on the macroeconomic trend, the MLF interest rate may be lowered once in the first half of 2024, and the LPR of the two maturities will follow suit, thereby promoting a steady and moderate decline in the comprehensive financing cost of the society.
In Wang Qing's view, even if the MLF interest rate remains unchanged in 2024 and the LPR** with a term of more than 5 years is not adjusted, the policy will also guide the residential mortgage interest rate to fall sharply by comprehensively lowering the lower limit of the mortgage interest rate.
At present, the domestic economy has not yet recovered to the potential level, and it is expected that the LPR will still be lowered to a certain extent in the future under the expectation of increasing counter-cyclical and cross-cyclical adjustments. Zhou Maohua said that considering that it will take some time for the pressure on banks' net interest margins to ease, it is expected that the follow-up LPR downward will need the support of the central bank's "quantity + ** reform" and other relevant policies to guide the market interest rate center to move further downward.
Experts said that considering the current credit delivery process, the current partial deposit and loan interest rates "inverted" phenomenon, and the demand of commercial banks to stabilize interest margins still exists, it is expected that the LPR and new loan interest rates will further narrow the downside.
The cost control effect of banks' liabilities is also an important factor affecting the room for LPR reduction. Wen Bin expects that in 2024, there will still be measures to control the cost of banks' liabilities, such as continuing to reduce the deposit listing rate or the upper limit of MPA (macro-prudential assessment) assessmentFurther self-discipline and regulation of high-interest active liability products such as agreements, notices, and agreements, and promote small and medium-sized banks to reduce long-term deposit interest rates. (ENDS).