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Mortgage interest rate repricing experts say it will not affect the monthly supply level too much

On the morning of December 28, the official website of the people's Bank of China issued announcement [2019] No. 30 of the people's Bank of China (hereinafter referred to as the announcement). Since March 1, 2020, financial institutions should negotiate with existing floating rate loan customers on the pricing benchmark conversion terms, Convert the interest rate pricing method agreed in the original contract to take the quoted interest rate of the loan market (hereinafter referred to as' LPR ') as the pricing benchmark, and form an additional point (the additional point can be a negative value), and the additional point value will be fixed during the remaining term of the contract; It can also be converted to fixed interest rate, which should be completed before August 31, 2020 in principle.

On August 17, 2019, the people's Bank of China issued an announcement on reforming and improving the LPR formation mechanism to promote the marketization of loan interest rates.

On October 8, the central bank implemented the new policy of housing loan interest rate, and the newly issued commercial individual housing loan interest rate was formed based on the LPR of the corresponding period in the latest month.

In November, the LPR decreased for the first time. The one-year LPR fell again to 4.15%, and that over five years was 4.80%, both of which decreased by 5 basis points.

The relevant person in charge of the people's Bank of China answered a reporter's question on the conversion of the pricing benchmark of stock floating interest rate loans. At present, nearly 90% of the newly issued loans have been priced with reference to LPR, but the pricing of stock floating interest rate loans is still based on the benchmark interest rate of loans, which can not reflect the changes of market interest rates in time, which is not conducive to protecting the rights and interests of both lenders and borrowers. In order to further deepen LPR reform, the people's Bank of China issued [2019] No. 30 announcement to promote the smooth conversion of stock floating rate loan pricing benchmark.

Principle of benchmark conversion of stock floating rate loan pricing

According to the announcement, the stock floating rate loans referred to in this announcement refer to the floating rate loans (excluding provident fund personal housing loans) issued by financial institutions and priced by reference to the benchmark interest rate of loans that have signed contracts but have not been issued before January 1, 2020. From January 1, 2020, all financial institutions shall not sign floating rate loan contracts priced with reference to the benchmark loan interest rate.

As for the principles to be followed in the conversion of stock floating rate loan pricing benchmark, the relevant person in charge of the people's Bank of China said:

First, the borrower can negotiate with the bank to convert the pricing benchmark into LPR or fixed interest rate. The borrower has only one option and cannot convert again after conversion. Stock floating rate loans that have been in the last repricing cycle may not be converted;

Second, the conversion work starts from March 1, 2020 and should be completed before August 31, 2020 in principle;

Third, the loan interest rate level after conversion shall be determined by both parties through negotiation. In order to implement the regulation requirements of the real estate market, the interest rate level of stock commercial individual housing loans at the conversion time point shall remain unchanged.

How to convert from loan benchmark interest rate to LPR?

The relevant person in charge of the people's Bank of China said that since the date of the announcement, the bank should formulate the working plan for the conversion of pricing benchmark of stock commercial individual housing loans as soon as possible, including system support, personnel training, etc., and inform customers through various channels (including official website and network announcement, SMS, email, mobile banking and telephone notice, etc.), On the premise of consensus by both parties, the original contract terms shall be changed in a simple and easy way as far as possible.

According to the person in charge, when the pricing benchmark is converted to LPR, the term and variety of LPR are determined according to the loan term of the original contract, and will not be adjusted within the remaining term of the contract; The increment value is the difference between the latest execution interest rate of the original contract and LPR in December 2019 (can be negative), which will remain unchanged during the remaining term of the contract; The interest rate level remains unchanged at the conversion time point; The borrower and the borrower may re agree on the re pricing cycle and re pricing date, and the minimum re pricing cycle is one year.

For the same commercial personal housing loan, if it is converted at any time point between March and August 2020, the point addition value shall be determined according to the LPR in December 2019 and the originally implemented interest rate level. The point addition value is not affected by the conversion time point, and banks and customers can handle it reasonably separately. At present, the repricing cycle of most stock commercial personal housing loans is one year and the repricing date is January 1 of each year.

Taking this as an example, if the original contract term of a commercial personal housing loan is 20 years and the remaining term is 8 years, the interest rate agreed in the original contract is more than 5 years, the benchmark interest rate of the loan rises by 10%, and the current interest rate is 4.9% & times; (1+10%)=5.39%。 The LPR over 5 years released in December 2019 is 4.8%. If the borrower and the borrower decide to convert the pricing benchmark on March 30, 2020, and the repricing cycle is still one year and the repricing date is still January 1 of each year, the increase rate shall be 0.59 percentage points (5.39% - 4.8% = 0.59%). From March 30 to December 31, 2020, the implemented interest rate level is still 5.39% (4.8% + 0.59%). On the first repricing date thereafter, i.e. January 2021

‘& rsquo; On the 1st, according to the re agreed re pricing rules, the implemented interest rate will be adjusted to more than 5-year LPR + 0.59% issued in December 2020, and so on every year thereafter.

Expert: it will not affect the monthly supply level too much

Yan Yuejin, research director of the think tank center of E-House Research Institute, told Huaxia times that the central bank actively optimized and adjusted the LPR policy based on the guidance of interest rate market-oriented reform, especially the pricing mechanism of stock loans, so as to better transform the original pricing method into LPR pricing method, This has a certain impact on the stock loan market or the original mortgage loan market. However, it should be noted that this impact is a change in the calculation method, but the interest rate itself will not change, or will not affect the monthly supply level of home buyers too much.

Yan Yuejin believes that, first, the LPR will change every month, but the LPR that buyers actually face will change once a year or once every 30 years. This can be discussed with the bank and it is suggested to adjust it once a year. Second, once the base point is agreed, it will remain unchanged. In fact, it is similar to the discount concept of banks in the past. In the past, once the discount is negotiated, it will remain unchanged in the 30-year contract.

Yuan Chengjian, vice president of Zhuge house search, told the Huaxia times that for users, the fixed interest rate is fixed for a long time, but they can't enjoy the dividend of downward interest rate, but they can also avoid rising costs when the interest rate rises. The method of adding points to the pricing benchmark by LPR is market-oriented for users. They can enjoy the reduction of the repayment amount brought by the downward interest rate, but the repayment amount also increases when the interest rate rises. In terms of the current interest rate market environment, the probability of LPR will go down. The scheme of choosing LPR as the pricing benchmark may be a more stable and mainstream scheme.

Yuan Chengjian believes that this plan of the central bank solves the problem of interest rate pricing conversion of the stock plan at one time, and allows stock mortgage users to enjoy the dividend of interest rate decline. It also maintains the stability of mortgage interest rate and will not stimulate market expectations. Source: Huaxia times