Our reporter Liu Qi
On May 17, the People's Bank of China (hereinafter referred to as the "Central Bank") issued three important notices in succession, announcing the cancellation of the lower limit of the national commercial individual housing loan interest rate policy for the first and second housing, the reduction of the individual housing provident fund loan interest rate, and the adjustment of the minimum down payment ratio of individual housing loans.
Pang Ming, the chief economist of Jones Lang LaSalle Greater China, said in an interview with the Securities Daily that this set of policies "combination boxing" is conducive to reducing the down payment burden and cost of residents, enhancing the ability and willingness to purchase houses, and creating a more appropriate monetary and credit environment from the demand side to the stability and recovery of the property market. This will also help improve residents' consumption capacity and willingness, support the recovery and expansion of consumption, effectively guarantee and improve people's livelihood, actively expand domestic demand, and play the fundamental role of consumption in driving economic growth.
"From the perspective of policy content, this round of 'three successive launches' has been the strongest in the real estate support policies in the past three years, and has significantly exceeded market expectations, releasing a strong signal to support the steady and healthy development of the real estate industry." Wang Qing, chief macro analyst of Oriental Jincheng, said.
No lower limit of policy interest rate at the national level
On May 17, the Central Bank issued the Notice on Adjusting the Commercial Individual Housing Loan Interest Rate Policy, which clearly stated that the lower limit of the commercial individual housing loan interest rate policy for the first house and the second house at the national level was cancelled.
At the same time, the notice proposed that each provincial branch should guide the interest rate pricing self-discipline mechanism of each provincial market in accordance with the principle of implementing policies based on the city, and independently determine whether to set the lower limit and the lower limit level (if any) of the commercial personal housing loan interest rate in each city under its jurisdiction according to the real estate market situation in each city under its jurisdiction and the regulatory requirements of the local government. Banking financial institutions shall reasonably determine the specific interest rate level of each loan according to the lower limit of interest rate (if any) determined by the self regulatory mechanism of interest rate pricing in each provincial market, in combination with the operating conditions of the institution, customer risk status and other factors.
According to the previous policies and regulations, the lower limit of the commercial individual housing loan interest rate for the first housing will be relaxed periodically for cities where the sales price of new commercial residential buildings has declined month on month and year on year for three consecutive months during the assessment period. According to the data in the Report on the Implementation of China's Monetary Policy in the First Quarter of 2024 recently released by the People's Bank of China, as of the end of March, 75 of the 343 cities (prefecture level and above) in China had lowered the lower limit of the first housing loan interest rate, and 64 had canceled the lower limit.
Tao Ling, Vice Governor of the People's Bank of China, said at the State Council's regular policy briefing on May 17 that this decision would no longer set the lower limit of the national loan interest rate policy for first and second homes. For the first tier cities and some hot cities, the city government can still independently determine the lower limit of the local housing loan interest rate policy according to the city policy. If the relationship between supply and demand in the real estate market changes significantly in the future, the central bank will restore the lower limit of the policy in time or guide the city government to restore the lower limit of the policy to regulate supply and demand. After canceling the lower limit of the housing loan interest rate policy, commercial banks can independently determine the interest rate level according to the risk status of customers, so as to realize the marketization of housing loan interest rate.
Chen Wenjing, the market research director of China Index Research Institute, told the Securities Daily that this time the central bank cancelled the lower limit of the national housing loan interest rate, and the policy was favorable and extended to second homes. It is expected that more cities will cut the housing loan interest rate, and the space for the first tier and core second tier cities to cut the housing loan interest rate is also expected to open.
Lower the interest rate of provident fund loan
On the same day, the Central Bank also issued the Notice on Reducing the Interest Rate of Personal Housing Provident Fund Loans. The People's Bank of China has decided to reduce the loan interest rate of personal housing provident fund by 0.25 percentage points from May 18, 2024. The loan interest rate of the first personal housing provident fund for less than five years (including five years) and more than five years will be adjusted to 2.35% and 2.85% respectively, and the loan interest rate of the second personal housing provident fund for less than five years (including five years) and more than five years will be adjusted to no less than 2.775% and 3.325% respectively.
Yan Yuejin, the research director of E-House Research Institute, said in an interview with the Securities Daily that this policy has a positive effect on the subsequent application of provident fund loans, the reduction of housing purchase costs and the support of housing consumption. In particular, the policy of overlapping down payment of housing loans will have a substantial impact on subsequent buyers' active entry into the market. The subsequent housing purchase mode of "low down payment+low commercial loan interest rate+low provident fund interest rate" will be formed, which will fully help to activate the real estate sales market this year and also help to comprehensively boost the recovery of the real estate market.
Down payment ratio dropped to a historical low
The Notice on the Policy of Adjusting the Minimum Down Payment Ratio of Individual Housing Loans was jointly issued by the Central Bank and the State Financial Supervision and Administration Administration on May 17. According to the notice, for households who purchase commercial housing with loans, the minimum down payment ratio of commercial individual housing loans for the first housing is adjusted to not less than 15%, and the minimum down payment ratio of commercial individual housing loans for the second housing is adjusted to not less than 25%.
On this basis, the provincial branches of the Central Bank and the dispatched offices of the State Administration of Financial Supervision and Administration independently determine the minimum down payment ratio of commercial personal housing loans for the first and second housing in each city under their jurisdiction according to the regulation requirements of the city government and the principle of implementing policies based on the city.
According to Tao Ling, at present, except 8 cities such as Beijing, Shanghai, Guangzhou and Shenzhen, other cities have chosen to implement the national bottom line policy of 20% and 30%. This time, the minimum down payment ratio of the first house loan at the national level was reduced from 20% to 15%, and the minimum down payment ratio of the second house loan was reduced from 30% to 25%. After the adjustment, the city government can still make policies accordingly. On the basis of the lower limit of the down payment proportion determined by the city government, commercial banks can independently determine the specific down payment proportion according to the customer risk status. After the optimization of the minimum down payment ratio, the threshold for residents to buy houses can be lowered, which will help boost housing consumption.
Yan Yuejin believes that this is of great significance to the promotion of housing loans, the rapid release and large-scale release of just needed and improved housing, and will have a positive impact on the real estate market and real estate stocks.
Chen Wenjing said that after the central bank lowered the lower limit of the down payment ratio this time, it is expected that more cities will follow up and implement it. There is also room and expectation for the first tier cities to reduce, further reducing the threshold for home buyers.
