The interest rate of the stock mortgage is generally falling, and the idle money is prepaid or the stock is speculated? Some home buyers said they were "confident to make money in A-shares"

Source of this article: Times Weekly Author: Zhou Mengmei

Reporter Zhou Mengmei

A new round of interest rate cuts on existing mortgages is about to land.

Recently, more than 20 banks, including large state-owned banks, joint-stock banks and urban and rural commercial banks, have issued announcements on the batch adjustment of the interest rates of the stock of personal housing loans, and the interest rates of the stock of housing loans that meet the corresponding conditions will be adjusted in batches on October 25.

Except for the case where the loan is in Beijing, Shanghai, Shenzhen and other regions and is a second home loan, the interest rate of other eligible first and second home loans will be adjusted to the loan market prime rate LPR-30BP, which is 3.55% after adjustment based on the latest LPR of more than 5 years (3.85%), a decrease of about 0.5 percentage points from 4.06% before the adjustment.

Some buyers who have repaid their loans early have expressed regret. A netizen said on the social platform that because the prepayment of the mortgage was as high as one million yuan, not to mention the 2 years of tightening the belt, now that the stock market is coming, seeing others making a lot of money, and not having a little cash in their hands to participate, they can't help but feel unwilling.

Since the official launch of a package of blockbuster financial policies on September 24, market confidence has been greatly boosted, and the A-share market has also ushered in a wave of upward movement. As of October 16, the Shanghai Composite Index rose by more than 16%, the Shenzhen Component Index rose by more than 20%, and the ChiNext Index rose by more than 30%. In this context, whether to use the spare money in hand for prepayment of loans or stock speculation has sparked a lot of discussion. If you don't pay off your loan early, is it a good time to enter the stock market?

Yesterday cannot be chased, but the future can still be. Recently, a reporter from Time Weekly conducted relevant research and interviewed several home buyers to understand their thoughts and concerns.

Source: Picture Worm Creative

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I am confident that I can make money in A-shares."

"Now that the market is getting better, I am confident that I can make money in A-shares, and the yield of wealth management can also outperform the adjusted mortgage interest rate (3.55%)." Wang Ke (pseudonym), born in the 90s, said that he would not repay the mortgage in advance in the future.

Wang Ke, a programmer working in a foreign-funded company, bought his first home in Hangzhou in 2021, when the city's property prices were at a high level and his total mortgage was close to 1.5 million. Although the salary level is not low, he is also under pressure.

According to Wang Ke, his monthly salary is close to 40,000 yuan, but before the prepayment and mortgage interest rate are lowered, the monthly repayment amount is close to 13,000 yuan according to the 5.3% mortgage interest rate.

"In the past two years, I have often worried about the risk of losing my job, and carrying a 30-year mortgage is like serving a prison sentence, which is very stressful." Wang Ke told the Times Weekly reporter that he wanted to take advantage of the high income to quickly repay the mortgage in advance to reduce the pressure in the future.

He repaid 400,000 yuan in advance at the beginning of 2023, coupled with the successive reductions in the interest rate of the existing mortgage, the pressure has been reduced a lot. "If the mortgage interest rate is lowered to 3.55%, my monthly mortgage repayment will be more than 8,000 yuan." Wang Ke said.

Talking about future capital planning, Wang Ke said that he is more willing to invest funds in the stock market and wealth management market than to repay loans in advance.

In recent years, Wang Ke has explored more possibilities outside of his career and began to learn about investment and financial management. "I don't want to be eliminated after the age of 35, and I can only gnaw on the deposit." He said that in addition to prepaying part of the mortgage, he also invested another part of his savings in stocks, gold, and bonds.

Regarding the question of "whether the yield of investment and wealth management can outperform the mortgage interest rate", Wang Ke said that his mortgage interest rate was as high as 5.3% before, but the stock market has not been good in the past two years, and the bank deposit interest rate is not high, so he cannot find any reliable financial management method. But as the market picks up, he is confident that future investment yields can outperform mortgage rates.

Li Lili (pseudonym), who has previously repaid her loans, is more inclined to invest her funds in the stock and wealth management markets in the future. "I have repaid part of my mortgage early, and I don't have too many worries at the moment, so my risk appetite has naturally improved." Li Lili said.

Five years ago, Li Lili bought her first house in Guangzhou, and then took a mortgage of 2 million. To her relief, the bank offered a relatively low mortgage interest rate of about 4% at that time. In the first three years after buying a house, Li Lili was not in a hurry to repay the loan.

In the past two years, with the low deposit interest rate and the correction of the stock market, Li Lili's money invested in the stock market began to lose, and the income invested in the wealth management market was much lower than her expectations, so she began to repay the money in her hand in advance.

"I repaid a mortgage in advance when I sold stocks and redeemed wealth management products in 2023, and I repaid part of it in early October this year." Li Lili said that the total amount of the two early repayments is more than 1 million, and there is still a part of the loan mainly to deal with the withdrawal of the provident fund.

Talking about the future funding arrangement, Li Lili said that she may be more inclined to invest in the stock market in the future, and she is confident in obtaining excess returns, but she will not participate in large positions.

Expert: In the future, the LPR rate may be below 3%.

On October 12, the Times Weekly reporter conducted a questionnaire survey on "whether the loan will be repaid in advance in the future", and a total of 148 home buyers participated in the questionnaire, of which 83 people chose "do not plan to repay the loan in advance in the future", accounting for 56.08%; 65 people chose "will continue to repay the loan in advance", accounting for 43.92%.

What are the reasons for choosing to continue prepayment?

Zhu Mingming (pseudonym) is currently preparing for prepayment. "According to my situation, if I repay the mortgage in advance and choose to shorten the repayment period (the monthly repayment amount remains the same), the loan interest amount can be reduced by nearly 300,000 yuan." She said that the interest savings are so much, there is no reason not to pay it early.

In 2019, Zhu Mingming bought his first house in Guangzhou, with a loan amount of about 1.03 million yuan and a mortgage interest rate of 4.8%. After paying off the mortgage for a few years, Zhu Mingming found that most of the money he paid was interest.

According to Zhu Mingming's calculations, if the mortgage is reduced to 500,000 yuan, she chooses to shorten the repayment period, shortens the repayment period to 9 years and 7 months, and the monthly mortgage amount remains unchanged (about 5,200 yuan), and her total mortgage interest will drop to more than 90,000 yuan. If she does not make prepayment, even if the current loan interest rate of LPR-30BP is calculated, the total interest on her loan is as high as 380,000. That is to say, if you choose to repay the loan in advance or not, the interest difference during the period is about 290,000.

"I don't know how to invest, and cash doesn't increase in my hands." Zhu Mingming believes that the best financial management for her is to repay the mortgage in advance.

"I would advise against prepaying your mortgage." Pu Zulin, chief economist of Zhengxin Futures, pointed out that the LPR interest rate will continue to fall in the future, and it may never return to more than 4%, and may even be below 3%.

Pu Zulin said that before 2021, the mortgage interest rate of home buyers was generally higher, and everyone would compare whether the spare money in their hands was used for financial management with high returns, or whether it was more cost-effective to repay the mortgage in advance. After the general adjustment of mortgage interest rates on October 25, the mortgage interest rate of 3.55% is only 1.41% compared with the yield of the 10-year Treasury bond (which closed at 2.14% on October 16), which is already at the lowest level since 2019.

"Correspondingly, all central banks around the world are printing money, and the purchasing power of money will continue to decline, and the price of assets such as gold, equity, and bonds will rise. From the perspective of wealth allocation, it is better to buy the above assets than to pay off the mortgage early. ”

The reduction of the interest rate of the existing housing loan is really good for home buyers, or reduces the phenomenon of prepayment of loans by residents.

Dongxing Securities Research Report pointed out that the adjustment of the interest rate of the stock of housing loans will help reduce the interest expenses of borrowers, reduce the average annual household interest expenses, help promote consumption and investment, reduce prepayment behavior, and compress the space for illegal replacement of stock housing loans. For banks, after the interest rates of existing and new loans are flattened, it is expected to alleviate the pressure of prepayment of mortgages, which will help banks stabilize the scale of high-quality loans and exchange price for volume. From the perspective of bank asset quality, the reduction of residents' repayment pressure will reduce the risk of mortgage loan failure and non-performing loans.