China Net Finance, February 21 (Reporter Zhang Ziyi) The loan market ** interest rate (LPR) ushered in the first reduction this year. Among them, the 1-year varieties remained unchanged, and the varieties with a maturity of more than 5 years decreased by 25 basis points.
Analysts believe that the actual decline of the LPR is generally large, which will effectively drive the comprehensive financing cost of the society to continue to decline, and further improve the financial support for the real economy. In addition, for the real estate market, the reduction of the medium- and long-term LPR benchmark interest rate will help reduce the repayment pressure of residents' real estate purchases and existing housing loans.
LPR with a maturity of more than 5 years was sharply reduced by 25 basis points.
On February 20, the People's Bank of China authorized the National Interbank Lending Center to announce the latest loan market ** interest rate (LPR): 1-year LPR is 345%, and LPR for more than 5 years is 395%。
Source: People's Bank of China.
In the view of Dong Ximiao, chief researcher of Zhaolian, the LPR ** adjustment is within expectations, but the LPR with a term of more than 5 years fell by 25 basis points, far exceeding market expectations and setting the largest decline since the reform of the LPR formation mechanism.
The direct reason for this LPR adjustment is that due to the recent RRR reduction and other factors, the cost of funds of banks has declined, and the first bank has the motivation to reduce the LPR by additional points. Wang Qing, chief macro analyst of Oriental Jincheng, analyzed.
Wen Bin, chief economist of China Minsheng Bank, believes that on the one hand, banks will cut deposit interest rates many times in 2023, superimposed on the role of targeted interest rate cuts and RRR cuts at the beginning of this year, the cost of funds for banks will be reduced, and the space for LPR reduction will be opened. On the other hand, with the current liquidity remaining reasonable and abundant, the issuance cost of banks' active debt instruments (interbank certificates of deposit and commercial bank bonds) has also dropped significantly, further reducing the comprehensive debt cost of banks.
More importantly, the current economic environment requires a reduction in real interest rates, and the reduction of LPR** is also a need to stabilize growth, stabilize real estate, promote financing, and boost confidence. Wen Bin said.
Compared with the previous period, the 1-year LPR** was flat, and the LPR** with a maturity of more than 5 years was significantly reduced by 25 basis points, achieving an asymmetric downward adjustment.
The main reason for the asymmetric adjustment of LPR** in the two maturities is that the decline in LPR with a maturity of more than 5 years has been 15 basis points smaller than that of a 1-year LPR since 2019. Wang Qing said.
Wang Qing analysis, more than 5 years LPR** is the pricing benchmark for personal housing loans and medium and long-term loans of enterprises and institutions, the current property market continues to run at a low level, the demand for steady growth of investment is high, and there is a strong need to significantly reduce the LPR** of more than 5 years. Keeping the 1-year LPR** unchanged will help stabilize banks' net interest margins, which are already at historically low levels, and make room for a significant reduction in LPRs over 5 years.
Considering that the LPR with a maturity of more than 5 years has declined significantly, the actual downward range of the LPR is generally larger, which will effectively drive the comprehensive financing cost of the society to continue to decline, and the financial support for the real economy will be further improved. At the same time, the decline in LPR of more than 5 years mainly affects medium and long-term loans, and the impact on banks' net interest margins is expected to be generally controllable, considering the reduction of deposit interest rates. Wen Bin said.
The monthly payment of a 1 million yuan mortgage was reduced by nearly 150 yuan.
LPR with a maturity of more than 5 years is linked to the interest rate of residential mortgages. In the view of industry insiders, the sharp decline in LPR with a maturity of more than 5 years will help reduce the repayment pressure of residents' purchase of real estate and existing mortgages.
In terms of historical adjustments, China has a total of 8 five-year LPR reductions, but in the past, the reduction was generally carried out by 5-15 basis points. This one-time cut of 25 basis points is the most drastic rate cut in history. This is the biggest signal. Yan Yuejin, research director of the E-House Research Institute, said that the current real estate market is in the stage of stabilization and recovery, but the recovery process needs to be consolidated. The interest rate cut is conducive to the reduction of the cost of funds and directly leads to the reduction of housing loans, which has a positive impact on the housing loan market.
Dong Ximiao said that the LPR with a term of more than 5 years has dropped sharply and beyond expectations, sending a strong signal to boost residents' housing consumption and promote the steady development of the real estate market. After the decline of LPR with a maturity of more than 5 years, the interest expense of residents' housing loans will be reduced, which will help boost residents' willingness and ability to consume housing. For existing mortgages, the mortgage interest rate will be adjusted after the repricing date; For new mortgages, it is expected that most banks will keep the increase on the basis of this LPR, thereby reducing the effective interest rate of new mortgages.
Ma Hong, a senior researcher at the Guangkai Chief Industry Research Institute, said that the reduction of the medium and long-term LPR benchmark interest rate will help reduce the repayment pressure of residents' real estate purchases and existing housing loans. As the current recovery of commercial housing sales is less than expected, the recovery of market confidence requires more policy support and patience. Based on the reduction of the 5-year LPR benchmark interest rate, the subsequent commercial bank ** loan interest rate will also be reduced.
Assuming that the loan balance of 1 million yuan for the first house, the equal principal and interest mortgage, and the 30-year loan term are taken as examples, the monthly payment is reduced by about 145 yuan, and the total principal and interest are reduced by 5 yuan in total for 30 yearsAbout 20,000 yuan. Ma Hong said that the loan concessions are more significant, and it is expected to promote the improvement of incremental housing purchases and other consumption areas in the future, and promote the decline in commercial housing sales during the year compared with 2023.