From January 1, 2024, the interest rate of most existing mortgages will be reducedThe adjustment is 10 basis points. "January 1 is the repricing date for mortgage rates for most homebuyers, and the LPR value in the homebuyer's mortgage contract will be adjusted to the latest**. For now, it's from 43% to 42%。The bank adjusts automatically, and the customer does not need to take action. The loan manager of the Beijing branch of the Industrial and Commercial Bank of China said.
Revised by 10 basis points"At present, the interest rate of personal housing loans is basically in the form of floating interest rate, that is, the model of 'LPR + basis point'. "Although the central bank publishes the latest LPR every month, the LPR in the borrower's mortgage contract can only be adjusted every year on the repricing date, and can only be adjusted once a year." Most borrowers have a repricing date on January 1 of each year, but borrowers can also choose the loan origination date as the repricing date. In addition, the loan manager of the Bank of China explained to reporters: "The LPR with a maturity of more than 5 years issued by the central bank on June 20, 2023 will be increased by 43% to 42%, and unchanged for several months, the latest LPR of more than 5 years announced by the central bank in December is still 42%。"Therefore, for borrowers whose mortgage repricing date is on or after June 20, 2023, the LPR has been adjusted to the latest, but the mortgage contract with a repricing date of January 1 can only be adjusted this time. Bank of China loan manager said. At the same time, the adjustment of the interest rate of the existing housing loan is an adjustment to the LPR, which does not involve changes in other contract elements, and the previously adjusted increase in points remains unchanged.
According to estimates, taking a mortgage with a total loan of 1 million yuan, a loan term of 25 years, and equal principal and interest repayment as an example, after the mortgage interest rate is reduced by 10 basis points, the monthly payment will be 544542 yuan was reduced to 538942 yuan;The total amount of interest will be reduced by 1680,000 yuan, from 63360,000 yuan dropped to 61680,000 yuan.
A moderate downside in LPR is expectedSince 2023, the 1-year and 5-year LPRs have been cut by 20 basis points and 10 basis points, respectively.
Industry insiders believe that this will push the interest rate of loans to enterprises and residents further down, and enhance the motivation of enterprises and residents to invest and consume. Among them, mortgage interest rates have dropped significantly. 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 073 percentage points. Looking forward to the trend of interest rate adjustment in 2024, Wen Bin, chief economist of Minsheng Bank, said: "In 2024, the central bank will most likely guide the LPR to decline moderately, thereby promoting a steady decline in financing costs and activating the demand for production and consumer credit." However, combined with the central bank's previous proposal to maintain bank interest margins and profits at a reasonable level, it is expected that the further downside of LPR and new loan interest rates will be narrowed. Ming Ming, chief economist of CITIC**, also believes: "Considering the impact of the accumulated events since June 2023 and the recent adjustment of deposit rates, the possibility of a downside of long-end LPR** has increased, but the adjustment may be limited." Ming Ming said that in the future, there is still room for afterburner in cost reduction and credit easing tools, combined with the "flexible, moderate, precise and effective" monetary policy tone of the ** Economic Work Conference, and the possibility of further MLF interest rate cuts in the first half of 2024 to guide LPR ** reduction is not ruled out.
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