Sure enough, yesterday (February 20), the LPR was lowered as scheduled. LPR for 5 years and above**395%, a one-time drop of 25 bps, the 1-year LPR has not changed for the time being, and it is still maintained at 345%。
This time it can be said that it is unprecedented, and the interest rate cut is undoubtedly a great benefit to the real estate industry, so what will be the impact of this interest rate cut on the real estate market? How will the real estate policy go this year? Below I will throw bricks and stones, briefly analyze, and welcome everyone to give your views in the comments.
The rate cut was much larger than expected
The first shot of the New Year's bailout was firedWhy is the rate cut much larger than expected? According to CRIC statistics, since August 2019, there have been a total of 8 five-year LPR cuts, but the largest decline in history is only 15 basis points, which occurred in May and August 2022, and the other declines are all 5-10 basis points, and now a one-time reduction of 25 basis points, which can be said to be a large reduction beyond expectations. 
What will be the impact of such a large LPR cut on the real estate industry? The most direct benefit is to drive down the mortgage interest rate and reduce the cost of housing for customers. After this reduction, the interest rate on the first home in the country can be lowered to 355%, like Shanghai and Shenzhen, the interest rate for the first home can be lowered to 385%。It is understood that a number of commercial banks in Shanghai have raised the interest rate of the first home loan to 385% (LPR-10BP), second home loan interest rate 425%（lpr+30bp）。Assuming that the mortgage is 1 million yuan, and the equal principal and interest are 30 years, the total interest can be saved by about 50,000 yuan, and the monthly payment can also save nearly 150 yuan. I believe that it can still play a certain role in promoting customers who are going to buy houses.
For customers who are already repaying their mortgages, the mortgage interest rate will be adjusted on the repricing date (generally in January next year), and the monthly payment pressure will also be reduced, which is also conducive to promoting consumption to a certain extent. Many people may say that although the LPR has been cut sharply, the mortgage interest rate is still too high. In particular, second homes have a limited effect on stimulating the demand for buying houses. According to the data of the Shell Research Institute, the average interest rate of the first mainstream mortgage in Baicheng in January 2024 is 384%, and 4 for second suites41%, the gap between the two is very large. From this point of view, there is indeed a lot of room for optimization in the mortgage interest rate of the second home, because at present, more customers who have the ability to buy a house are improving and luxury customers, how to stimulate them to enter the market, in addition to lifting the purchase limit, reducing the interest rate of the second home may also be a direction worth considering. 
And now the economic situation is obvious to all, the demand for housing is still there, but the purchasing power is gone, or it is relatively weak. Many people do want to buy but can't afford it, and many homeowners can't afford to replace it. Only by continuing to reduce mortgage interest rates and further reducing the cost of buying a house can we really play a stimulating role. In addition to the demand side, the reduction of the LPR interest rate will also reduce the financing cost of development enterprises. Now real estate companies, especially private real estate enterprises, are in urgent need of blood transfusion, as we mentioned in the article before, and now the attitude towards the inflow of funds into real estate has changed. It is not only necessary to guide financial institutions to accurately transfuse blood to real estate enterprises, but also to provide new financing channels for real estate enterprises to further improve the financing difficulties of real estate enterprises. Cutting interest rates now will undoubtedly reduce the burden on real estate companies. 02New home transactions declined during the Spring FestivalThe situation is still not optimisticSince the beginning of this year, the property market has continued to release positive signals, and the relief policies on the first end and the demand side have come one after another, but at present, the effect has not yet met expectations. According to CRIC data, in January, the total sales of TOP100 real estate companies were 2350600 million yuan, a year-on-year decrease of 342%, down 479%, a new low in recent years. You must know that there have been a lot of favorable policies in January, and such data has made real estate people a little disheartened. Perhaps affected by the downturn in January, during the Spring Festival, the enthusiasm of real estate companies to launch the market was not high. According to CRIC monitoring, the number of new ** in the 50 key cities in the two weeks of the Spring Festival (February 2-February 15, 2024) is only 396440,000 square meters, down 11% year-on-year and down 53% from the same period in 2022. There is no suspense, and the transaction of the new housing market during the Spring Festival is also relatively bleak. CRIC monitoring data shows that the trading volume of 44 key cities during the Spring Festival week is only 23380,000 square meters, down 87% month-on-month, down 40% year-on-year, and 82% lower than the same period in 2022. 
In the past, the more popular tide of returning to the hometown during the Spring Festival did not appear, such as Anhui, northern Jiangsu, Sichuan and Chongqing, the traditional population export provinces of Anhui, northern Jiangsu, Sichuan and Chongqing, although the real estate enterprises vigorously stated, but the effect was average. However, it is worth noting that compared with the bleak first-hand housing market, the second-hand housing market ushered in a small wave during the Spring Festival. According to the monitoring of the Beike Research Institute, the number of second-hand housing viewing and transaction volume in the key 50 cities during the Spring Festival holiday in 2024 will rebound significantly compared with 2023. Among them, the level of transaction volume increased by more than 7% year-on-year, of which the largest increase was in second-tier cities, an increase of 98%, followed by third-tier cities increased by 65%, and first-tier cities decreased slightly by 3%. 
According to data from the Shell Research Institute, among the first-tier cities, the number of property viewing and transactions in Beijing decreased slightly compared with last year, and the transaction volume in Shenzhen doubled compared with last year; Among the second- and third-tier cities, Suzhou, Zhengzhou, Xi'an, Nanjing, Wuhan, Hefei, Chengdu, Ningbo, Foshan, Jinan, Wuxi, Yinchuan, Luoyang, Huizhou, Changzhou and other cities have doubled their transaction volume compared with last year. The core reason is that most of the customers in big cities have returned to their hometowns for the New Year, and on the other hand, the level is different. Judging from the situation of the second-hand housing market, it shows that there are still many potential home buyers, and it depends on how real estate companies compete for the second-hand housing market. SummaryReal estate people don't have to be too pessimistic, from the current determination to save the market, real estate has not improved for a day, and the good policy will not stop for a day. Since the beginning of this year, there have been several waves of favorable policies: including the relaxation of purchase restrictions in first-tier cities; The State Administration of Financial Supervision has launched the "Urban Real Estate Financing Coordination Mechanism", and the first batch of real estate whitelists have been released; The Ministry of Housing and Urban-Rural Development announced the decentralization of "autonomy in real estate regulation". Coupled with today's interest rate cut, under the superposition effect of multiple policies, optimistically, it is expected that the transaction will improve slightly in March and April. 
**10,000 Fans Incentive Plan
On the other hand, the current bailout policy has not been exhausted, and there is still room for it. For example, in first-tier cities and strong second-tier cities, the four restrictions will be relaxed on a larger scale, and the second- and third-tier cities will be further released. In addition, the sales side will further reduce the burden, such as reducing down payments, reducing mortgage interest rates, reducing taxes and fees, etc., which may come one after another. Ming Yuanjun said last year that the real estate industry will be good in the future, and those who should come will come.