The LPR will be announced in June, can the interest rate of the existing mortgage be reduced? Consumer loans rolled to 2.9%, and there was a curve of home buyers to repay the loans

Time Weekly

2024-06-20 07:31Posted on the official account of Guangdong Times Weekly

Source of this article: Times Weekly Author: Zhou Mengmei

June 20 is the day when the latest LPR is announced, which has attracted much attention from the market.

At present, the "5.17" new deal for the property market has been full for a month, and new home buyers have obtained tangible benefits.

According to the relevant data of the central bank, at present, except for Beijing, Shanghai and Shenzhen, other major cities in the country have canceled the lower limit of mortgage interest rates, and commercial banks have also adjusted mortgage interest rates. In many cities, the interest rate of the first set of housing loans with a term of more than 5 years is only in the early 3s, such as the first home loan interest rate of the Foshan branch of HSBC Bank recently as low as 3%.

Some people are happy and some are worried, and for the stock buyers whose loan interest rates have been "inverted", they have mixed feelings.

"The loan interest rate for my (first) house is 4.5%, and the interest rate for the first home loan (more than 5 years) issued in Shenzhen is about 3.5%." Wang He (pseudonym), a property owner in Shenzhen, told the Times that he was planning to repay the loan early or replace part of the mortgage with a consumer loan.

With the interest rate spread between the interest rate of new loans and the interest rate of existing housing loans further widening, and the further decline in consumer loan interest rates in the market, the trend of some property owners borrowing consumer loans to repay housing loans has risen, and many loan repayment strategies have also appeared on social platforms.

However, it should be noted that the act of borrowing consumer loans to repay housing loans is illegal and will face the risk of bank loans.

"Borrowing a consumer loan to repay a housing loan is equivalent to borrowing a short term to redeem a long-term loan, a consumer loan is a short-term need to be repaid, and a housing loan is a long-term repayment. If the mortgage owner borrows a large amount, the short-term debt repayment pressure is relatively large, and there will be liquidity risk. More importantly, it is illegal to borrow a consumer loan to repay a housing loan, once the bank finds that the consumer loan has been misappropriated to the housing loan, it can withdraw the loan, and once the bank consumer loan is not repaid, it will cause default. Huang Dazhi, a researcher at the Xingtu Financial Research Institute, told a reporter from the Times Weekly.

Source: Picture Worm Creative

There are constant calls for reducing the interest rate of the stock of mortgages

"At present, the interest rate of the first set of housing loans with a term of more than five years in Guangzhou, HSBC can achieve 3.15%." Lin Fang (pseudonym), a staff member of the personal loan department of a branch of HSBC in Guangzhou, told a reporter from Times Weekly that the interest rate of housing loans with a term of more than five years in foreign banks is relatively low, but HSBC can only do pure commercial loans, not a combination of "provident fund + commercial loan".

Lin Fang also told the Times reporter that the interest rate of HSBC's first home loan in Foshan is currently 3%, and the second set of interest rates is 3.05%. "It takes about 7-15 working days to get the loan, and there are certain requirements for the applicant's qualifications, mainly depending on the work unit and flow."

In addition to competing loan interest rates, commercial banks are also rolling up speed and service.

If the information is complete, the four major banks in Guangzhou can handle the loan within 3-4 working days, and they will also arrange special personnel to dock. For foreign banks, it will take 7-15 working days. A loan intermediary in Guangzhou told the Times that the first set of interest rates of the four major banks with a term of more than five years is currently 3.4%.

According to data from the Shell Research Institute, the average commercial loan interest rate for the first house in Baicheng fell to 3.45% in May, down 12BP from April and 55BP from the same period in 2023, which is also the first time that the average interest rate of the second house in Baicheng has entered the "3" prefix since 2019.

In May, the lowest interest rate in the first set of 100 cities was 3.0% in Zhuzhou, Hunan, and the lowest interest rate in the second set was 3.15% in Foshan, Guangdong.

As the interest rate of new mortgages has dropped to the beginning of 3, the owners of existing mortgages have expressed their "broken defenses", and the calls for further reduction of existing mortgage interest rates continue.

"My house was bought in 2021, when the interest rate was 5.35%, with the decline of the LPR in the past two years, my mortgage interest rate is currently 4.3%, although it has decreased a lot, but compared with the new first set of interest rates of 3.3%, it is still 100BP, and my heart is very unbalanced, so I have the idea of prepayment of the loan, and I look forward to the interest rate of the existing mortgage to drop again." Huang Ming (pseudonym), an owner who lives in Guangzhou, told a reporter from Time Weekly.

Based on a 30-year housing loan of 2 million yuan, under the repayment method of equal principal and interest, Huang Ming's monthly payment amount is 9,897 yuan, and under the same conditions, if the loan interest rate of 3.3% is calculated, Huang Ming's monthly payment amount is 8,759 yuan, and the monthly payment can be reduced by 1,138 yuan. Compared with the interest rate of the existing housing loan and the new first set of interest rates, the difference in total interest is more than 400,000 yuan.

On July 14, 2023, the central bank proposed for the first time to encourage commercial banks to adjust the interest rate of existing housing loans, and in September of that year, many banks started to reduce the interest rate of existing first home loans.

At present, the interest rate of the existing mortgage may face constraints in terms of bank interest margins.

"We have also noticed that there have been many calls for reducing the interest rate of existing mortgages recently, which is reasonable from a practical perspective." Huang Dazhi told the Times Weekly reporter: "However, the current interest rate spread of banks is at a historical low, and the pressure on interest rate spreads is greater, or the interest rate of existing housing loans may be lowered again, and supporting policies are needed to support commercial banks to reduce debt costs." ”

According to the State Administration of Financial Supervision and Administration, the net interest margin of commercial banks was 1.54% at the end of the first quarter of 2024, a new low after falling below 1.7% for the first time at the end of the fourth quarter of last year.

"Under the pressure of interest margins, it is necessary to consider the sustainable operation of commercial banks." Huang Dazhi said.

Consumer loan interest rates are as low as 2

As the market interest rate pivot continues to fall, the interest rate of consumer loan products continues to decline. The Times Weekly reporter noticed that since the beginning of this year, activities such as interest rate coupons, discounts, and group pools for consumer loan products have emerged in an endless stream, and there have been many products with interest rates as low as 2.

Among them, China Merchants Bank launched a loan promotion in June, and the bank's app showed that new customers can enjoy flash loans with loan interest rates as low as 2.9% (simple interest) per annum.

A customer manager of Ping An Bank also told the Times Weekly reporter that the bank launched the "White Collar New Loan" consumer loan product group activity, and if the key customer who participated in the activity successfully recommended 2 colleagues to calculate the loan amount, he could get a loan preferential interest rate coupon, and the annual interest rate (simple interest) could be as low as 2.88%, and the activity ended on June 30.

In addition, according to the official WeChat account of Bank of Ningbo, the bank's "Ninglaihua" launched exclusive benefits for new customers in mid-June, and after receiving coupons, they can enjoy consumer loan products with an annualized interest rate (simple interest) as low as 2.98%.

With the decline in consumer loan interest rates, many owners with "high-interest rate" mortgages have started to think of borrowing consumer loans to repay their mortgages.

"I applied for a 2.95% consumer loan from a joint-stock bank, and my wife and I each borrowed 100,000 yuan, and we borrowed and repaid it for one year. After a lot of trouble, I took it to pay off the mortgage early. Zhang Yu (pseudonym), a mortgage owner in Shanghai, told the Times that his current mortgage interest rate is 4.55%, which is 160 BP lower than his mortgage interest rate if calculated based on consumer loan interest rates.

"The 200,000 yuan borrowed is planned to be repaid within a year, which is equivalent to paying the mortgage in advance. There are many people around me who do this, and everyone regards this as a way to save themselves from the stock of high-interest mortgages. Zhang Yu said.

This is not an isolated case, and many users on social platforms share tips on how to borrow consumer loans to repay their mortgages. On May 29, a user on Xiaohongshu shared the relevant steps of his practical operation, and received hundreds of comments and posts, and many users in the comment area said that they had also carried out similar operations.

Judging from the data released by the central bank, the operating loans and personal consumption loans of commercial banks increased year-on-year, while the balance of personal housing loans showed a downward trend.

According to the statistical report on the loan investment of financial institutions in the first quarter of 2024 released by the central bank, at the end of the first quarter of 2024, the balance of household operating loans was 23.45 trillion yuan, a year-on-year increase of 15.4%, an increase of 1.29 trillion yuan in the first quarter, and the balance of consumer loans excluding personal housing loans was 19.81 trillion yuan, a year-on-year increase of 8.7%; The balance of personal housing loans was 38.19 trillion yuan, down 1.9% year-on-year.

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