Lead. In addition to financial and credit support, there is still room for adjustment in local regulation and fiscal and tax support.
On February 20, the central bank announced the latest LPR**, which was lowered by 25bp to 395%, what impact will this rate cut have on the real estate market? In addition to interest rate cuts, what room is there for real estate policy adjustments?
The rate cut node is in line with expectations.
However, the 5-year LPR cut by 25bp was more than expected.
On February 20, the People's Bank of China authorized the National Interbank Lending Center to announce that the one-year LPR was 345% compared to 3 last time45%；LPR for more than 5 years is 395% compared to 4 last time2%。
The timing of this interest rate cut is basically in line with market expectations. On the one hand, the recent RRR cut and the reduction of deposit interest rates by commercial banks have effectively reduced the cost of funds for banks and opened up the downside of LPR.
However, the rate cut has been much larger than the market expected. Since August 2019, the LPR of 5 years and above has been adjusted a total of 8 times, and the largest decline before that was 15BP, which occurred in May and August 2022, and the remaining 5 reductions were 5-10 basis points, so the 25BP reduction was the largest since the establishment of the LPR mechanism.
Incremental mortgage interest rate reduction, stock mortgage burden reduction to stabilize the market.
Reduce financing costs and stabilize the main body.
Interest rate cuts are good for both ends of real estate supply and demand. On the demand side, the 5-year LPR is the interest rate anchor for housing loans, and its reduction will directly drive down mortgage interest rates85% (LPR-10BP), second home loan interest rate 425%（lpr+30bp）。After the mortgage interest rate is lowered, for the new mortgage borrowers, the same loan of 1 million, equal principal and interest for 30 years, can save about 50,000 yuan of interest expenses than before, and reduce the monthly payment by 150 yuan, which will mobilize the enthusiasm of some groups with a clear willingness to buy a home and accelerate the release of their demand for home purchases, but for more potential home buyers, the stimulus brought by the interest rate cut is not enough to offset their "bearish and wait-and-see" wait-and-see sentiment, so the scale of housing demand that can be leveraged is still relatively limited.
The mortgage interest rate of the existing mortgage will be adjusted on the repricing date (generally in January next year), when the pressure on residents' monthly repayment will be reduced, and the subsequent consumption potential is expected to be released.
On the supply side, the reduction of LPR interest rates will also reduce the financing costs of development enterprises. Not only limited to interest rate cuts, since 2024, financial support for real estate has been intensively released, and efforts have been made to stabilize the main body. As of the 19th, more than 160 billion yuan of real estate "white list" project financing has been approved by banks, and the first loans of some projects have been issued. At the end of last year, the central bank invested a net of 350 billion yuan in PSL to support the construction of the "three major projects", and the China Development Bank and the Agricultural Development Bank issued special loans to urban village reconstruction projects in more than 30 cities, with a cumulative amount of more than 24.9 billion yuan in the first batch and a total credit line of more than 560 billion yuan. Scope of investment support within the budget.
In addition to financial credit support.
There is still room for adjustment in local regulation and fiscal and tax support.
In addition, what is the room for adjustment of real estate policy? On the one hand, tax and fee reductions, housing transaction taxes and fees, stabilize demand and then stabilize the market, such as buying the only family house or improving the house, reducing and exempting deed tax, and shortening the period of VAT and individual income tax exemption for house purchases.
On the other hand, local regulation and control have been further optimized, and the four cities of Beijing, Shanghai, Guangzhou and Shenzhen gathered around the Spring Festival to relax purchase restrictions, opening a new round of policy relaxation, combined with the Ministry of Housing and Urban-Rural Development's statement of "giving local governments greater autonomy in regulation and control", we believe that in the future, there is still significant room for loosening the four restrictions in first-tier cities and strong second-tier cities such as Hangzhou and Chengdu, and most of the remaining second- and third-tier cities have basically lifted the administrative restrictions on housing transactions, and the remaining policies that can be optimized mainly include the identification of the number of loan limits, provident funds, housing subsidies, etc. (*Kerry).
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Article**: Kerry