Good news has finally arrived!
The central bank has significantly reduced the existing mortgage interest rates, benefiting 50 million households and 150 million people!
It can be said that this is the first time in 16 years that the central bank has taken the lead in such a large-scale reduction of existing mortgage interest rates.
So why has it taken so long for our country to finally relax its stance on the existing mortgage interest rates?
What are the reasons behind this?
Secondly, why can't some people be happy when facing this good news?
What should we, as homebuyers, do to make the right choice?
In this episode, we will discuss this thoroughly.
The People's Bank of China has finally announced that it will reduce the average existing mortgage interest rate by 50 basis points, bringing it closer to the first-time home mortgage interest rate, and the minimum down payment ratio for first and second homes will also be uniformly reduced to 15%.
Let's sort this out!
The average reduction of 50 basis points in existing mortgage interest rates means that if your current mortgage interest rate is 4.5%, then after the reduction, your mortgage interest rate will be 4%.
If calculated based on a loan of one million yuan with a 30-year equal principal and interest repayment method, you can save about 300 yuan per month, and about 100,000 yuan over 30 years.
However, the People's Bank of China also said that it would reduce the existing mortgage interest rates to be close to the newly issued loan interest rates.
So what is the current new mortgage interest rate?
According to the statistics of the Central China Real Estate Research Institute, the average new mortgage interest rate in our country is now around 3.3%.
This means that if your current mortgage interest rate is above 3.8%, the reduction may be more than 50 basis points.
This way, everyone can save more interest expenses.
It can be said that this policy has finally relieved the breath of those with existing mortgages.
No longer worried: why has the first-time home mortgage been continuously reduced, and my existing mortgage has not been reduced?
But looking at the essence through the phenomenon!
Why is it the first time in 16 years that the central bank has taken the lead in such a large-scale reduction of existing mortgage interest rates?
Because we must know that even in 2008, during the global economic crisis, the central bank only gave a 30% discount on the new mortgage interest rate, and the minimum down payment ratio was adjusted to 20%, while the reduction of existing mortgage interest rates was more based on the autonomy of commercial banks.
However, subsequently, many small and medium-sized banks also autonomously gave a 30% discount on the existing mortgage interest rates.
But this time it's different, it's the central bank directly leading, and it's going to bring the existing mortgage interest rates directly to the vicinity of the first-time home mortgage interest rates.
It can be said that, whether in terms of behavior or results, this is the first time in 16 years!
So why is the central bank doing this?
There are three major reasons behind it.
First, it is because the interest rate difference between the current new mortgage interest rates and existing mortgage interest rates is getting bigger and bigger, and the voice of the people is getting higher and higher.
Since the beginning of this year, the central bank has reduced the 5-year LPR by a total of 35 basis points to 3.85%, and some places have directly reduced the first-time home mortgage interest rate to 2.89%.
The current average interest rate for existing mortgages is around 3.92%!
The difference between the two is nearly 100 basis points.
If calculated according to the above method, a mortgage of one million yuan will have to pay about 200,000 yuan more in interest than the first-time home mortgage.
Let's take 2008 as an example, at that time, the first-time home mortgage interest rate was 4.158% based on a 30% discount on the benchmark interest rate of 5.94%.
Although the central bank did not lead commercial banks to reduce the existing mortgage interest rates, commercial banks later autonomously gave a 30% discount on the existing mortgage interest rates, or reduced the interest rate difference of existing mortgages through mortgage transfer services.
To put it bluntly, this large-scale reduction of existing mortgage interest rates is to make the mortgage market develop more healthily.
Secondly, in the global economic environment, releasing domestic demand is still the top priority for our country!
Let's look at a set of data: according to the data released by the National Bureau of Statistics, from January to August this year, the sales area of new commercial housing was 606 million square meters, a year-on-year decrease of 18.0%, of which the sales area of residential housing decreased by 20.4%; by the end of August, the unsold area of commercial housing was 738 million square meters, a year-on-year increase of 13.9%, of which the unsold area of residential housing increased by 21.5%.
From this set of data, we can see that the real estate market in our country is still very weak.
Therefore, whether from the perspective of stabilizing the housing market or promoting domestic demand, this is not favorable.
In the last episode, we said that the US interest rate cut is just the beginning of the second half of the economic game between China and the US, and we are still facing many challenges, and the US will only become more and more malicious.
Therefore, promoting domestic demand is still the top priority for our country at present.
So after the existing mortgage interest rate is reduced by 50 basis points, it will reduce the average annual family interest expenditure by about 150 billion yuan.
So such a huge amount of funds is released, bringing very favorable conditions for our country to promote domestic demand.
In addition, the unified reduction of the down payment ratio for the second and first homes to 15% can be said to be the highest in history, and this policy can directly drive the demand for improved housing.
Because the second-hand house is easy to sell, everyone can more conveniently replace the big house.
This new and old house policy comes together, the real estate market is not alive?
Domestic demand is not up?
Isn't the Chinese economy stable?
Moreover, as the US enters the interest rate reduction cycle, the central bank has more room for interest rate cuts.
The current economic background of our country is completely different from that of 2008.
First, the renminbi has become the world's fourth-largest payment currency, and it can be said that the global influence of the renminbi is not what it used to be.
Second, in recent years, our country has been adopting the opposite monetary policy from the United States, which of course is due to the strong economic foundation of our country, which is also not what it used to be.
So, the US interest rate hike, the renminbi is cutting interest rates, this itself has brought favorable conditions for our country to release domestic demand.
So now that the US dollar has started to cut interest rates again, the central bank will have more policy space to further reduce interest rates, and thus prevent systemic risks in financial institutions.
To put it bluntly, that is, the central bank has more room to ensure the profits of commercial banks.
Let's look at two things.
First, the central bank will reduce the reserve requirement ratio by 0.5 percentage points, thereby providing about 1 trillion yuan of long-term liquidity to the financial market.
To put it bluntly, that is, the central bank has injected new blood into commercial banks, allowing commercial banks to have more liquidity to turn over, isn't this helping commercial banks to fight for a greater profit space?
Secondly, now the governor of the People's Bank of China has also said that the 7-day reverse repo operation interest rate will be reduced by 0.2 percentage points, from the current 1.7% to 1.5%!
What does this mean?
That is, when the People's Bank of China buys valuable securities from commercial banks, it actively reduces the interest rate, isn't this also reducing the interest burden on commercial banks?
So, under the current economic situation, the central bank has the confidence to lead commercial banks to significantly reduce the existing mortgage interest rates.
Although the existing mortgage interest rate will be reduced by an average of 50 basis points, some people are still not happy.
That's because the current consumer loan interest rate has been reduced to a minimum of 1.88%, and many people are still converting commercial loans to public loans, or transferring loans to reduce their own mortgage interest rates.
For this, I want to say that there is a certain risk in transferring a house loan.
First, transferring a house loan requires repaying the loan first, releasing the bank's mortgage, and then it can be re-loaned.
In this case, whether we can successfully transfer the loan is also a question mark.
That's because banks also have clear requirements for loans with lower interest rates, and some banks will stipulate that they cannot repay loans with loans!
Step back and say, even if the house is transferred again, we will also have to pay tens of thousands of yuan in deed tax, so is it worth it?
Secondly, transferring a house loan also faces the risk of whether it can be renewed after expiration.
If the house loan is converted into a consumer loan, then the loan period will not be as long as 30 years, it may only be 3 to 5 years, and if the bank does not renew the loan after expiration, our repayment pressure will increase.
Based on this, now that the central bank has significantly reduced the existing mortgage interest rates, this is of course a good thing for us 150 million people with houses, and we don't need to increase our own uncertainty.
What do you think?
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