The stock mortgage interest rate is ＂cut＂. Come and calculate how much you can save on monthly mortgage.
Since January, the repayment pressure of existing mortgage customers has been reduced.
In 2022, the LPR (loan market quoted interest rate) which is closely related to the mortgage interest rate for more than five years experienced three downward adjustments, totaling 35 basis points. Since the repricing date of mortgage interest rate of homebuyers is mostly January 1st every year, this means that the monthly mortgage payment of these homebuyers will be significantly reduced from New Year’s Day in 2023.
Stock mortgage interest rate cut
On January 1st, the repayment pressure of existing mortgage customers will be greatly reduced. How much money can be saved?
According to an interview with the First Financial Reporter, in January 2020, Mr. Ouyang bought the first suite with a mortgage loan in Beijing, with a pure commercial loan of 800,000 yuan, which was repaid in equal principal and interest in 25 years. The loan interest rate in January 2022 was 4.65% (LPR in December 2021)+55 basis points =5.20%, and the monthly payment was 4,793.98 yuan.
He chose January 1st every year as the repricing date. The loan interest rate in January 2023 was 4.3% (LPR in December 2022)+55 basis points =4.85%, and the monthly payment was 4,607.07 yuan.
This means that after re-pricing according to the latest LPR on January 1, Ouyang can pay 186.91 yuan less every month. By analogy, if the mortgage is 2 million yuan, buyers can save nearly 400 yuan every month and nearly 4,800 yuan a year; If the mortgage is 4 million yuan, you can save nearly 10 thousand yuan in interest a year.
Mortgage interest rate repricing
On December 20, 2022, the last LPR of the year was released, with a one-year LPR of 3.65% and a five-year LPR of 4.3%, both unchanged from last month.
Although the LPR over five years has not been lowered this time, since 2022, the LPR over five years, which is closely related to the mortgage interest rate, has undergone three downward adjustments, with a total reduction of 35 basis points.
On January 20th, 2022, respectively, the LPR over five years decreased from 4.65% to 4.6%, down by 5 basis points; On May 20th, the LPR over five years decreased from 4.6% to 4.45%, down by 15 basis points; On August 22nd, the LPR over five years decreased from 4.45% to 4.3%, down by 15 basis points.
This also means that some buyers who are repaying loans will welcome the repricing of loan interest rates from January 1, 2023.
In August 2019, LPR was calculated according to the quotation of the new formation mechanism. Under the new LPR mechanism, the mortgage interest rate is changed from the fixed "central bank loan benchmark interest rate ×(1+ floating ratio)" to the loan market quoted interest rate (LPR) of the corresponding period as the pricing benchmark, that is, the mortgage interest rate = "LPR+fixed basis point", so as to calculate the monthly payment.
For existing loan users, after the mortgage interest rate is changed, each loan customer can choose between "fixed interest rate" and "floating interest rate".
However, different customers have different repricing dates. If the mortgage chooses a fixed interest rate, the interest rate during the remaining loan period will not change with the change of LPR level; If the mortgage is anchored by LPR, the interest rate will be readjusted once a year. There are two times to reprice the mortgage interest rate. One is to recalculate the mortgage interest rate on January 1st every year according to the LPR plus point on December 20th of last year. The other is that the repricing date is the corresponding date of the loan issuance date. On each repricing date, the interest rate level is recalculated and determined by the corresponding period LPR of the latest month and the above plus point value.
There is still a downside possibility for LPR over 5 years.
In the past year, under the favorable policy release, more and more cities’ first home loan interest rates entered the "3 era".
According to the latest data of the central bank, the weighted average interest rate of new residential mortgage in October was 4.3%, which was lower than the lowest level (4.34%) set in June 2009.
The Monetary Policy Committee of the People’s Bank of China pointed out at its regular meeting in the fourth quarter of 2022 that we should do a good job in ensuring the delivery of buildings, people’s livelihood and stability, meet the reasonable financing needs of the industry, promote industry restructuring and mergers and acquisitions, improve the assets and liabilities of high-quality head housing enterprises, support the rigid and improved housing demand due to the city’s policy, do a good job in housing financial services for new citizens and young people, safeguard the legitimate rights and interests of housing consumers and ensure the stable development of the real estate market.
Many experts believe that in 2023, there is still a certain downside possibility for LPR with a term of more than five years.
Wang Qing, chief macro analyst of Oriental Jincheng, judged that there is still much room for the later policy toolbox to relax the purchase conditions, reduce the down payment ratio and lower the interest rate of residents’ mortgage. Among them, it is very urgent to guide the LPR quotation for more than five years to be further lowered and continuously reduce the interest rate of residents’ mortgage. This means that even if the policy interest rate (MLF interest rate) remains stable in 2023, the targeted interest rate cut for real estate will continue to advance, and it may land in January 2023 at the earliest. "If all demand-side support policies, including targeted interest rate cuts, are adjusted in place, the property market is expected to show a trend of recovery around mid-2023."
Wen Bin, chief economist of China Minsheng Bank, thinks that the repricing date of residential mortgage is mostly January 1 every year from the perspective of bank interest margin, and it does not rule out the possibility that the quotation bank will postpone the five-year LPR quotation until the first quarter of 2023 from the perspective of maintaining the annual asset income, which can not only effectively promote credit growth, but also give itself a time window to further reduce the debt cost, which is feasible.