What benefits will be brought by the adjustment of interest rates on existing mortgages?

Involving about 4000 million borrowers, the average burden reduction is about 0.8 percentage points——

What benefits will be brought by the adjustment of interest rates on existing mortgages?

On September 9, financial institutions such as the Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of China, and China Construction Bank successively issued announcements to clarify the adjustment scope, adjustment rules, service channels and time of the first set of housing loans in stock.

Previously, the People's Bank of China and the State Financial Regulatory Administration jointly issued the Notice on Matters Related to Reducing the Interest Rate of the First Housing Loan in Stock (hereinafter referred to as the "Circular") to guide the borrowers and lenders of commercial personal housing loans to adjust and optimize their assets and liabilities in an orderly manner and reduce the interest rate of the first set of housing loans in stock. What is the purpose of this interest rate adjustment for existing mortgages? What are the benefits to borrowers? How can I apply for an interest rate adjustment? The reporter conducted an interview.

Reduce the burden of housing consumption and improve the consumption capacity of residents

According to the Notice issued by the two departments, starting from September 9, borrowers of the first commercial personal housing loan of the stock can apply to the lending financial institution to issue a new loan to replace the commercial personal housing loan of the first set of housing. At the same time, borrowers of the first commercial personal housing loan of existing housing can also apply to the lending financial institution to negotiate changes to the interest rate level agreed in the contract.

The reporter learned that the stock of the first set of housing commercial personal housing loans refers to the first set of housing commercial personal housing loans issued by financial institutions and signed contracts but not issued before August 2023, 8, or other stock housing commercial personal housing loans whose actual housing conditions meet the first housing standards in the city where the borrower's actual housing situation is located.

The Circular clarifies that the interest rate level of newly issued loans shall be determined by the financial institution and the borrower through independent negotiation, but the increase in the loan market quotation rate (LPR) shall not be lower than the lower limit of the interest rate policy for the first residential commercial personal housing loan in the city where the original loan was issued. The newly issued loan can only be used to repay the existing first home commercial personal housing loan, and is still included in the management of commercial personal housing loan.

Data show that as of the end of June, the balance of personal housing loans in China was 6.38 trillion yuan. Some insiders estimate that there are nearly 6 million existing loan contracts for first homes in the country, of which about 1 million borrowers face negotiated adjustments due to high interest rates, and the scale of loans involved in adjustments may reach 4000 trillion yuan. After the interest rate adjustment, the financial burden of these borrowers will be significantly reduced, with an average reduction of about 25.0 percentage points.

"This will help reduce the burden of housing consumption, which in turn will increase the consumption and investment capacity of residents." Dong Ximiao, chief researcher of the China Recruitment Federation, told reporters that according to relevant calculations, the average reduction rate of the first home loan interest rate of the stock was about 80 basis points. Taking a stock mortgage of 100 million yuan, 25 years and original interest rate of 5.1% as an example, assuming that the mortgage interest rate is reduced to 4.3%, the borrower's repayment expenses can be saved by more than 5000,<> yuan per year.

Take convenient measures as much as possible to reduce borrowers' operating costs

"How to determine the first house", "Can the provident fund loan be adjusted", "If the loan is repaid early, can I still enjoy the interest rate reduction"... After the release of the existing mortgage interest rate adjustment policy, it has received widespread attention from all walks of life, and some borrowers are eager to know whether their mortgages can enjoy the preferential policy of interest rate reduction.

The reporter learned that in the scope of application of the policy, this "first house" includes two types of situations: first, the housing loan that meets the first housing standard in the city where the original loan is issued; Second, the borrower's current actual housing situation has met the first housing standard of the city where the borrower is located, and other stock housing commercial personal housing loans.

Recently, Beijing, Shanghai and other cities announced the implementation of the "recognize housing but not recognize loans" policy. Some borrowers' homes, originally identified as "second homes," may now be recognized as "first homes." How to understand that "the borrower's current actual housing situation has met the first housing standard in the city"?

Dong Ximiao explained that if the family had no other housing when taking out a loan to buy the house, the "house and loan" policy at that time led to the second housing loan interest rate being processed. Since then, the family has not purchased a new house, but the current area has implemented the policy of "recognizing a house but not a loan", and this time it can be implemented according to the first set.

In addition, if the loan is not the only house of the family in the local area when the purchase of the house, but other houses are sold later through transactions and other means, and the house becomes the only house of the family and the local government has implemented the policy of "recognizing the house but not recognizing the loan", this time it can be implemented as the first set.

In terms of loan types, CCB said that housing provident fund loans, housing provident fund loans in portfolio loans, and loans for the purchase of commercial houses such as shops are not within the scope of this adjustment; ICBC also stated that the provident fund loan part of the provident fund loan and the portfolio loan is not within the scope of adjustment, and for the commercial personal housing loan in the portfolio loan, the interest rate level can be adjusted separately if it meets the conditions.

For borrowers who have applied for prepayment, banks follow the principle of "due diligence" to maximize the benefits of borrowers. "For customers who prepay their loans, as long as they have not paid off the loan, all those who meet the conditions can be subject to interest rate reduction." Sui Yunfei, a staff member of the housing finance and personal credit department of China Construction Bank, said that for those who have submitted an early repayment application but have not yet completed the deduction, customers can cancel the early repayment application according to their own needs, and those who meet the conditions can also be included in the scope of this adjustment.

The Circular requires that financial institutions should speed up the formulation of specific operating rules, do a good job in organization and implementation, improve service levels, respond to borrowers' applications in a timely manner, and take convenient measures as much as possible to reduce borrowers' operating costs.

Dong Ximiao said that the reason why the application date was set for September 9 was to give the bank enough time to revise the contract text, modify the adjustment system, identify customers who meet the standards, and announce the application process and application materials to borrowers.

At present, all commercial banks are actively preparing to ensure that customer adjustment applications are accepted from September 9. "CCB is stepping up preparations internally to maximize the convenience of borrowers. For the loan is the first home loan, there is no need for customers to apply, and our bank will directly adjust the batch on September 25, so that borrowers can enjoy the benefits of the policy as soon as possible. Sui Yunfei said.

"There is no fee for the interest rate adjustment process of the existing first home loan, and in most cases, the borrower does not need to initiate an application, and the borrower should directly communicate and negotiate with the bank under special circumstances." Dong Ximiao reminded that no matter what kind of adjustment method, borrowers do not need to operate through mortgage intermediaries or other external institutions, let alone spend extra money to find a relationship.

Interest rate adjustments are beneficial to borrowers and can also alleviate prepayment to a certain extent

In recent years, the relationship between supply and demand in China's real estate market has undergone major changes, and borrowers and banks have demands for orderly adjustment and optimization of assets and liabilities.

On July 7, the Political Bureau of the CPC Central Committee held a meeting and pointed out that it is necessary to effectively prevent and resolve risks in key areas, adapt to the new situation of major changes in the supply and demand relationship of China's real estate market, adjust and optimize real estate policies in a timely manner, and make good use of the policy toolbox according to urban policies to better meet the rigid and improved housing needs of residents and promote the stable and healthy development of the real estate market.

The "Circular" issued by the two departments is to guide commercial personal housing loan borrowers and lenders to adjust and optimize assets and liabilities in an orderly manner, standardize the order of the housing credit market, and better meet the demand for rigid and improved housing.

People's Bank of China. The relevant person in charge of the State Financial Supervision and Administration said that the decline in the interest rate of existing housing loans can save interest expenses for borrowers and help expand consumption and investment. For banks, it can effectively reduce the phenomenon of prepayment and reduce the impact on bank interest income. At the same time, it can also reduce the space for illegal use of business loans and consumer loans to replace existing housing loans, and reduce hidden risks.

People's Bank of China. The State Administration of Financial Supervision stated that it will pay close attention to market trends, guide banks and customers to conduct independent negotiations in accordance with the principles of marketization and rule of law, orderly reduce the interest rate of existing housing loans, and maintain the order of market competition. (People's Daily reporter Wu Qiuyu)