Good news! Starting next week, the interest rates on most existing mortgages will be lowered again! How much will the monthly payment be reduced? Expert: Mortgage interest rates may continue to fall next year......

According to CCTV Finance, the reporter learned from a number of banks that from January 1, 2024 (next Monday), most existing housing loans will usher in a reduction in interest rates, with an adjustment of 10 basis points.

According to the Beijing News Shell Finance, the interest rate of existing mortgages that choose January 1 as the "repricing date" and are priced before June 20 this year will be cut by 10 basis points again. This does not conflict with the reduction of interest rates on existing housing that began at the end of September this year. Different from the increase in the interest rate of existing loans in September, although the LPR is updated once a month, for loan customers, the interest rate can only be adjusted once a year on the "repricing date" agreed in the contract, and the latest LPR announced before the repricing date shall prevail. It is understood that the repricing date for most loan customers is set to January 1 each year.

Most existing mortgages will be lowered from January 1 next year

Banks: No action is required from the customer

According to CCTV News, bankers introduced that the current personal mortgage interest rate in the market is basically formed by the loan market prime interest rate LPR plus or minus points, that is to say, the level of the mortgage interest rate is affected by the rise and fall of LPR.

The loan prime rate (LPR) is published monthly, while the mortgage rate is subject to annual adjustment. Lenders can choose to adjust on January 1 of each year, or they can choose to adjust on the loan disbursement date.

In January of each year, the bank will adjust the interest rate of personal housing loans for the new year according to the rise and fall of the LPR of the previous year.

Chen Jing, general manager of the consumer finance department of Bank of Communications Beijing Branch, said that in June 2023, the LPR was adjusted, and the LPR with a maturity of more than 5 years was reduced from 4.3% to 4.2%, a decrease of 10 basis points, and the loan interest rate of corresponding customers will also be reduced by 10 basis points. The repricing date for the vast majority of customers is January 1st, so the vast majority of customers will also adjust from January 1st, 2024, without any action from the customer.

According to the banker's estimates, take the first home loan in Beijing, the loan amount is 1 million yuan, the term is 20 years, and the personal housing loan with equal principal and interest repayment is taken as an example. On January 1 next year, the loan interest rate will be reduced from 4.3% to 4.2%, and the monthly payment will drop from 6,219 yuan to 6,166 yuan, a decrease of 53 yuan. If the loan term is calculated for 20 years, the total interest expense will be reduced by 12,801 yuan.

In late September, according to the notice of the People's Bank of China and the State Administration of Financial Regulation, the interest rate on more than 22 trillion yuan of existing housing loans was lowered, with an average reduction of 0.73 percentage points, benefiting 150 million people and reducing borrowers' interest expenses by 160 billion to 170 billion yuan per year.

Experts: Mortgage rates may continue to fall next year

Recently, major state-owned banks such as the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the Construction Bank of China, and the Bank of Communications, as well as 12 joint-stock banks such as China CITIC Bank and China Merchants Bank, have officially announced the reduction of deposit interest rates.

According to the Securities Daily, Yang Haiping, a researcher at the Securities and Futures Research Institute of the Central University of Finance and Economics and general manager of the Research and Development Department of the Bank of Inner Mongolia, pointed out that the background of the interest rate cut was that the LPR was not moved in December, and the expected RRR cut was not realized. "However, according to the judgment of the market, it is still necessary to cut the reserve requirement ratio and interest rates in the near future, and there is room for it. ”

Yang Haiping said that the bank interest rate cut is unexpected and reasonable, "commercial banks still want to maintain a reasonable net interest margin, can only reduce the deposit interest rate first." He judged, "This round of downward adjustment actually makes room for the LPR downward adjustment." ”

According to the "Daily Economic News", Wen Bin, chief economist of Minsheng Bank, pointed out that in 2024, the central bank will most likely still guide the LPR to decline moderately, thereby promoting the steady decline in financing costs and activating the demand for production and consumer credit, but the further downward space for LPR and new loan interest rates will be narrowed. In order to achieve "flexibility, moderation, precision and effectiveness", structural tools are also expected to play a greater role, and the need for further control of the cost on the liability side is still strong.

To make comprehensive arrangements and arrangements for the economic work in 2024, this year's Central Economic Work Conference requires that we should continue to "increase macroeconomic regulation and control" and "strengthen counter-cyclical and cross-cyclical adjustment of macro policies". This means that the policy of stabilizing growth will remain continuous. For the monetary policy in 2024, it is required that "a prudent monetary policy should be flexible, moderate, precise and effective".

Wang Qing, chief macro analyst of Oriental Jincheng, pointed out that under the prospect that the price level will still run at a low level, there is room for the central bank to cut interest rates and reserve requirements in 2024 with a view to boosting domestic demand and supporting the resolution of local debt risks. In 2024, the US and European central banks will turn to interest rate cuts, providing more room for mainland central banks to "focus on me" and flexibly implement monetary policy.

Wang Qing said that based on the macroeconomic trend, the MLF operating interest rate may be lowered once in the first half of 2024, and the LPR quotation of the two maturity varieties will be lowered at that time, so as to "promote the steady and moderate decline of social comprehensive financing costs". At the same time, we believe that even if the MLF interest rate remains unchanged in 2024 and the LPR quotation for more than 5 years is not adjusted, with a view to promoting the real estate industry to achieve a soft landing as soon as possible, the policy side will also guide the residential mortgage interest rate to fall sharply by comprehensively lowering the lower limit of the mortgage interest rate.

Edited by Duan Lian Du Bo

Proofreading|Sun Zhicheng

Cover image: Visual China (not related to the picture or text)

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