The first set of dynamic adjustment mechanism of housing loan interest rate was released

        New achievements have been made in the construction and improvement of the long-term mechanism of real estate regulation. The central bank issued a notice on its official website and decided to establish a dynamic adjustment mechanism for the interest rate policy of the first set of housing loans. For cities where the sales price of new commercial residential buildings has declined for three consecutive months on a month-on-month basis and year-on-year basis, the lower limit of the local interest rate policy of the first set of housing loans can be maintained, lowered or cancelled in stages.

        The phased adjustment of differentiated housing credit policy issued in September 2022 has a clear time effect: “For cities where the sales price of new commercial residential buildings in June and August 2022 has dropped continuously on a month-on-month basis and on a year-on-year basis, the lower limit of the interest rate of commercial personal housing loans for the first housing will be gradually relaxed by the end of 2022.”

        According to the statistics of the China Institute of Housing and Urban-Rural Development, since the introduction of the phased policy in September last year, the lower limit of the interest rate of the first housing loan in Wuhan, Tianjin, Wenzhou and other cities has been reduced to less than 4%, and the lower limit of the interest rate has been canceled in some cities, and the implementation of the interest rate has been up to December 31.

        The notice issued by the Central Bank this time is to institutionalize and make long-term effect on the basis of the continuation of the previous phased policies. The introduction of this policy means that the interest rate of the first housing loan in some cities is expected to continue the previous level or be further reduced.

        The notice specifies the “trigger” conditions of the mechanism: from the fourth quarter of 2022, the city governments can dynamically evaluate the changes in the sales price of new commercial residential buildings in the local area at the end of each quarter, from the end of the previous quarter to the second month of this quarter. For the cities where the sales price of new commercial residential buildings has declined for three consecutive months on a month-on-month basis and year-on-year basis during the evaluation period, the lower limit of the interest rate of commercial personal housing loans for the first housing will be gradually relaxed. According to the principle of implementing policies according to the city, the local government can independently decide to maintain, reduce or cancel the lower limit of the interest rate of commercial personal housing loans for the first local housing from the next quarter.

        According to the commercial housing price data of 70 large and medium-sized cities released by the National Bureau of Statistics every month, 38 cities have seen the sales price of newly-built commercial housing fall continuously in the last three months, both month-on-month and year-on-year. There are 13 second-tier cities, including Dalian, Fuzhou, Harbin, Lanzhou, Nanning, Xiamen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Wuhan, Changchun and Zhengzhou; There are 25 third-tier and fourth-tier cities, including Bengbu, Beihai, Changde, Dandong, Guilin, Huizhou, Jilin, Jining, Jinhua, Jinzhou, Jiujiang, Luoyang, Mudanjiang, Pingdingshan, Qinhuangdao, Shaoguan, Tangshan, Wenzhou, Wuxi, Xiangyang, Xuzhou, Yangzhou, Yichang, Yueyang and Zhanjiang.

        The notice also stipulates the “suspension” conditions of the mechanism: for cities that adopt the periodic reduction or cancellation of the lower limit of the local commercial personal housing loan interest rate for the first housing, if the sales price of new commercial housing rises for three consecutive months on a month-on-month basis and year-on-year basis in the subsequent evaluation period, the implementation of the national unified lower limit of the commercial personal housing loan interest rate for the first housing should be resumed from the next quarter.

        This makes local governments more rule-based and evidence-based when implementing policies based on cities. Promote the standardization, normalization and systematization of policy optimization and adjustment on the basis of clear evaluation criteria and operational details, which is conducive to consolidating the main responsibilities of urban governments and clarifying the core policy objectives, and enriching the depth, breadth and coverage of the policy toolbox of “implementing policies according to the city” and “one policy for one city”.

        The establishment of the dynamic adjustment mechanism depends on the changes in market prices. Some analysts believe that this more reflects the market principles of the real estate market regulation. This is a milestone in the transformation of real estate regulation from administrative means to market means, and an important breakthrough in the long-term mechanism of real estate. Through interest rate adjustment, we can stimulate the vitality of the market and make the house “liquid”. “To reduce the interest rate and set no lower limit for the first set of housing is essentially to reduce the purchase cost of the people who just need housing, encourage new citizens and young people to buy housing, and encourage migrant workers to return to their homes for home purchase. This not only achieves the effect of activating the market, but also does not violate the principle of” no speculation in housing “.

        At present, the housing prices in many cities are in the decline channel. Under the new mechanism, the expectation of the first mortgage interest rate reduction is strong, which may aggravate the wait-and-see mentality of home buyers. The follow-up policy can reduce the interest rate of the stock housing loan, which can not only reduce the monthly supply pressure of the housing loan family, but also release the consumption demand, which is conducive to expanding domestic demand. In this way, there will be a cycle for buying houses. At the stage of low interest rates, people will increase the purchase of houses and handle mortgages. This is ostensibly to support real estate, but in essence, it is to protect the local economy and protect the local house prices.

Article source：Fengshan Finance