Previously, there was no change for 9 consecutive months, and mortgage and car loans were saving money again. In June, LPR really reduced lending | quotes | car loans
The LPR, which has remained unchanged for 9 consecutive months, has finally been lowered. On June 20, 2023, the loan market quotation interest rate for June 2023 was announced - the one-year LPR was 3.55%, a 10 basis point decrease from before, and the five-year and above LPR was 4.2%, a 10 basis point decrease from before.
This is the first downward adjustment of LPR since 2023. Prior to this, there were three downward adjustments in LPR throughout 2022, with the last adjustment occurring in August of that year and no further changes thereafter. Until June 15th, not long ago this year, the medium-term lending convenience rate was lowered by 10 basis points. The industry generally believes that the LPR is also likely to be lowered on June 20th.
The full name of LPR is Loan Prime Rate, which is calculated by the National Interbank Funding Center to provide pricing reference for bank loans. It is quoted by various quoting banks based on the open market operating interest rate plus points.
At present, LPR includes two varieties: 1-year and 5-year and above. A one-year LPR is usually the reference benchmark for banks to provide liquidity loans to enterprises and individuals, while a 5-year or more LPR is the reference benchmark for medium and long-term loans, such as enterprise medium and long-term loans, personal housing mortgage loans, etc.
That is to say, with the reduction of LPR, various loan interest rates closely related to LPR will also experience a new wave of adjustment. For example, interest rates for corporate financing, existing and new residential loans, car loans, and consumer loans will all decrease. Obviously, the People's Bank of China's move is aimed at further driving down the actual loan interest rates of enterprises and residents, reducing financing costs for enterprises, alleviating personal repayment pressure, stimulating credit demand, and boosting consumer and investment spending among residents.
It is worth noting that the interest rate of existing housing loans will not change immediately. Because when the borrower signs the mortgage contract, they will agree with the bank on a repricing date, which is simply the day when the interest rate is recalculated every year. On this day every year, the mortgage interest rate will be readjusted based on the latest LPR. Generally speaking, this day is January 1st every year.
