5 year down to 3 95, what is LPR? Understand it in one article

Mondo Finance Updated on 2024-02-21

When I came back from vacation, I found outBig A is doing well, announced today by the central bankFive-year LPR downgraded, coupled with the relaxation of housing purchase restrictions in many cities a while ago, some people think that this moveIt is conducive to stimulating everyone's demand for housing purchasesIn addition, it may also be a good thing for those who are already paying off their mortgages.

*: Official website of the People's Bank of China.

Speaking of LPR, some people may still be a little unfamiliar. What is LPR? Will the impact be significant? Today, I would like to give you a good introduction to LPR.

What is LPRLPR isLoan market** interest rateThe abbreviation of "Loan Prime Rate" refers to the loan interest rate provided by financial institutions to the best quality customers, and LPR is generally used as the pricing basis in floating rate loan contracts.

It is calculated as follows:LPR is in most cases approximate MLF x%.

When it comes to LPR, it will definitely be saidmlf。Because when banks decide interest rates, they will first look at central bank indicators, namelyMedium-term lending facility, abbreviated as MLF, can be understood as the interest rate at which the central bank provides loans to banks that meet certain qualification requirements. Banks add basis points (i.e., x%) on the basis of MLF to lend outward, and the specific amount is determined by the average value of the 18 banks after effectively removing the beginning and tail.

LPR is divided into one-year and five-year terms, and the one-year LPR mainly affects liquidity loans (mainly short-term liquidity loans for enterprises and short-term consumer loans for individuals).The five-year LPR is related to the mortgageToday we will focus on the impact of the next five-year LPR on us.

Will it affect our lives? The reduction of the 5-year LPR is conducive to reducing the financing cost of the whole society, which is important for people with mortgage pressure, becauseIf certain conditions are met, the monthly mortgage interest can be directly reduced

Why do you say that certain conditions must be met? Because mortgage interest rates are divided into:Fixed interest ratewithLPR Floating RateOnce the contract determines one of them, one cannot be re-selected until the loan is paid off.

If you choose a fixed interest rate, the mortgage interest rate will not be affected by the LPR change during the subsequent repayment period.

If you choose a variable rate of LPR + basis points, you may have the opportunity to adjust your mortgage rate. In this mode,The mortgage contract will set a date to reset the interest rate for the next cycleThe adjustment period is generally 1 year, and after the adjustment date, the pricing benchmark is the LPR of the corresponding period of the latest month.

Someone will ask

Wouldn't it be better to choose LPR? Overall, fixed interest rates are set by the market, while floating rates are influenced by both the market and the market. In the case of a policy downgrade to the LPR, the LPR is relatively good, but it is also necessaryIt depends on your own situation

Someone asked the director

Will LPR affect the bond market? In fact, after experiencing a decline in deposit rates in December, inBank spreads are protected on a certain basisThe LPR fell more than expected, indicating the demand for credit promotion. However, from a fundamental point of view, real estate sales have still fallen sharply this year, and market worries may be relatively heavy, which determines the stumbling trend of the equity market and the strong trend of the bond market, and this reality should be respected at present. At the same time, on the basis of the significant compression of LPR-MLF, the market expects that if the LPR is to be lowered again, it will be necessary to continue to reduce the deposit interest rate, or reduce the MLF interest rateBoth are expected to support the continued strength of the bond market until property sales pick up

Moreover, the LPR interest rate is closely related to the yield of bank loan assetsWhen the yield on loan assets declines, under the influence of the price comparison effect, the cost performance of bond yields is relatively improved, and banks are expected to increase the allocation of bond assets. Therefore, the market also tends to believe that this reduction is good for the bond market. As one of the bond varieties allocated by banks, interbank certificates of deposit are expected to benefit from the LPR interest rate reduction.

Investment is risky, and you need to be cautious when entering the market).

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