Original title: Why the quoted interest rate in the loan market remains unchanged

Economic Daily reporter Ma Chunyang

The People's Bank of China authorizes the National Interbank Funding Center to announce that the loan market quoted interest rate (LPR) on May 20, 2024 is 3.45% for 1-year term LPR and 3.95% for more than 5-year term LPR. LPR of both varieties was the same as that of last month.

In the opinion of the insiders, the LPR quotation will remain unchanged in line with market expectations. On the one hand, the MLF interest rate remained unchanged in May, and the pricing basis of LPR quotation remained unchanged; On the other hand, the loan interest rate continued to decline, the bank's net interest margin continued to be under pressure, and the short-term downward space of LPR quotation was small.

As the anchor interest rate of LPR quotation, the change of MLF interest rate will have a direct and effective impact on LPR. Wen Bin, chief economist of China Minsheng Bank, said that on May 15, the People's Bank of China conducted a one-year MLF operation of 125 billion yuan, and the bid winning interest rate remained unchanged at 2.50%. In May, MLF achieved the renewal of "equal volume parity", which made the market expect that LPR would remain unchanged this month.

Since April, the loan interest rate has continued to decline, especially the downward pressure on the residential side is still large, and the bank net interest margin continues to be under pressure. According to the data of the People's Bank of China, the weighted average interest rate of new loans issued by enterprises in April was 3.76%, basically the same as that at the end of last month, 23 basis points lower than that of the same period last year; The interest rate of new loans for individual housing was 3.7%, 2 basis points lower than that of last month and 48 basis points lower than that of the same period last year, both of which were at historic lows. Wen Bin believes that in this context, the space for banks to further reduce LPR is also shrinking significantly.

Pang Ming, Chief Economist and Director of the Research Department of Jones Lang LaSalle in Greater China, believes that from the subjective will of the bank, the main indicators of the national economy show that the economy is stable, recovering and improving, the expectations, emotions and confidence of the business entities continue to improve, and continue to wait for the coordination and cooperation of early policies to achieve remarkable results, The enthusiasm of banks to actively reduce the LPR quotation has also weakened.

Some experts pointed out that some credit interest rates have been low at present, and the LPR quotation remains unchanged, which is also aimed at anti idling and improving efficiency.

Dong Ximiao, the chief researcher of Zhaolian Finance, said that the LPR remained unchanged this month, helping to ease the downward pressure on bank interest margin, and maintaining the sustainability and stability of the development of the real economy that banks serve. At the same time, under the condition of insufficient effective financing demand and rising fund idling, LPR did not further decline, which helped to reduce the misuse and misappropriation of credit funds due to low loan interest rates to some extent.

"With the acceleration of China's economic restructuring, transformation and upgrading, the economy has become more light, and the demand for credit has become weaker than in previous years. Under the scale operation of some financial institutions, the credit supply has exceeded the effective financing demand of the real economy. In this process, some enterprises take advantage of their own advantages and use the money from low-cost loans to buy wealth management, deposit time, or lend to other enterprises, which is easy to form idling and capital precipitation. " Wen Bin said that after the sharp reduction of LPR quotation in February, the recent continuation of "holding still" can also ease the idle arbitrage of funds caused by the rapid decline of loan interest rates and improve the efficiency of fund operation.

It is worth mentioning that although the LPR remained unchanged this month, the People's Bank of China issued several notices on May 17, canceling the lower limit of the national housing loan interest rate, reducing the down payment ratio of housing loans and the interest rate of provident fund loans, and introducing affordable housing refinancing. Dong Ximiao said that after the introduction of the central bank's package of policies, it will lower the threshold for residents' housing consumption, reduce the stock and new housing loan interest expenditure, better meet rigid and improving housing demand, stabilize residents' confidence and expectations, improve residents' willingness and ability to consume housing, form support for the real estate market from the demand side, and promote the steady and healthy development of the real estate market. This is also a reflection of the flexible, appropriate, precise and powerful monetary policy.

Wen Bin said that with the introduction of real estate financial policies by the People's Bank of China, the room for housing loan interest rate reduction has been further opened, which will help stabilize real estate from both supply and demand, boost confidence and demand, and also reduce the urgency and necessity of protecting real estate by reducing LPR again.

At the meeting of the Political Bureau of the Central Committee held at the end of April, it was pointed out that policy tools such as interest rates and deposit reserve ratio should be flexibly used to increase support for the real economy and reduce the cost of comprehensive social financing. Wang Qing, chief analyst of Oriental Jincheng, said that this meant that there was room for interest rate and reserve ratio cuts in the later period while the monetary policy remained stable.

Dong Ximiao suggested that in the next step, we should further optimize the real estate financial policy and stabilize residents' housing consumption expectations. At the same time, we will continue to implement policies such as tax reduction and exemption for new energy vehicles, and the "old for new" policy for consumer goods, and vigorously boost residents' willingness and ability to consume.