Can I apply for interest rate adjustment for my first home when applying for a loan? Multiple banks respond to homebuyers' concerns

Release time:Apr 16, 2024 12:23 PM

What kind of mortgage can you apply for a lower interest rate? Is it possible to adjust the fixed interest rate for mortgage loans? Can I apply for a loan that is not for the first home?

Recently, a reporter from China Bank and Insurance News noticed that five large state-owned banks and Everbright Bank have released common Q&A questions on the adjustment of interest rates for existing housing loans, timely responding to customer concerns.

According to the Notice on Reducing the Interest Rate of Existing First Home Loans issued by the People's Bank of China and the State Administration of Financial Supervision, starting from September 25, 2023, eligible borrowers can apply to the lending financial institution to issue new loans to replace the commercial personal housing loans for existing first homes. The interest rate level for newly issued loans is determined through independent negotiation between financial institutions and borrowers. At the same time, the borrower can also apply to the lending financial institution to negotiate a change in the interest rate level agreed upon in the contract.

Question 1: What kind of mortgage can I apply for adjustment?

Industrial and Commercial Bank of China, Bank of China, Postal Savings Bank of China: Loans subject to interest rate adjustments on existing housing loans must meet the following conditions: firstly, they belong to commercial personal housing loans; The second is those that have been disbursed before August 31, 2023 or have signed contracts but have not been disbursed; The third is to implement the first home loan interest rate policy when issuing loans, or if the actual housing situation meets the first home standard in the city where it is located; Fourthly, the loan disbursement interest rate is higher than the lower limit of the housing loan interest rate policy in the city where the loan disbursement was made.

Question 2: Can I apply for an adjustment if my first home loan is currently overdue?

China Construction Bank: Loans that meet the adjustment range but have arrears will not be adjusted temporarily until the arrears are repaid, and can be adjusted after the arrears are repaid.

Postal Savings Bank: For loans that meet the adjustment range but currently have arrears, it is generally not supported to adjust the interest rate of existing housing loans. Applications need to be made after repaying the arrears.

Question 3: Is there an outstanding personal housing loan in the bank that was issued before August 2023 and in accordance with the interest rate policy for second home loans eligible for adjustment?

Industrial and Commercial Bank of China: In order to support the demand for rigid housing, only the interest rate on existing first home loans will be reduced this time, and second home loans will not be within the scope of this adjustment. If the city updates the relevant "house recognition" and "loan recognition" policies in the future, an interest rate adjustment application can be submitted according to the latest policy requirements.

For example, if a user has an outstanding loan that was issued before August 2023 and processed according to the second home loan interest rate policy, and still follows the second home loan policy according to the current city policy of the user, it does not meet the adjustment range.

Construction Bank: It depends on whether the current actual housing situation has met the first housing standard of the city where the loan is applied for. If it meets the requirements, it can be considered as the first home loan.

For example, if the family does not have any other housing when taking out a loan to purchase this house, due to the "housing and loan recognition" policy at that time, the housing will be processed according to the interest rate of the second housing loan. However, the current region has implemented the "housing recognition but not loan recognition" policy, and this time it can be processed according to the first housing.

In addition, if the family does not own the only housing in the local area at the time of the loan purchase, but later sells other housing through transactions and other means, and this housing becomes the only housing for the family and the local government has implemented the "house recognition not loan recognition" policy, it can be executed as the first home this time. In the above situation, corresponding proof materials need to be provided.

Bank of China: It should be determined based on the current actual housing situation. If the current actual housing situation meets the first housing standard in the city and can provide relevant proof materials such as the number of housing units, adjustments can be made.

Question 4: How much can the interest rate on existing housing loans that meet the conditions be lowered?

Construction Bank: Currently, the mortgage interest rate is determined by adding or subtracting points on the basis of LPR. According to the Notice, the adjusted loan interest rate level shall not be lower than the lower limit of the commercial personal housing loan interest rate policy for the first home in the city where the original loan was issued, with an increase in LPR.

Therefore, this adjustment does not involve LPR, mainly adjusting the addition and subtraction points.

Assuming the current loan interest rate is 5.1% and LPR is 4.2%, the loan interest rate is determined by LPR+90 points, which is 4.2%+0.9%.

If according to relevant rules, assuming the level of LPR+10 points after the reduction of the interest rate for the first housing loan in stock, the interest rate will be reduced by 80 points this time, which means the loan interest rate will be adjusted from the current 5.1% to 4.3%.

Question 5: Can the mortgage interest rate be adjusted as a fixed rate?

Everbright Bank: Fixed rate customers can apply to Everbright Bank to lower the interest rate on their first home loan. After adjustment, the interest rate type remains fixed.

Question 6: Can it be lowered for those who have already processed early repayment?

Industrial and Commercial Bank of China (ICBC): We do not support requesting refunds for mortgage interest that has been paid before the release of this notice and is higher than the adjusted interest rate level. The adjustment of interest rates for existing housing loans is not retroactive.

Agricultural Bank of China: distinguishing between two situations: first, for those who have completed the early repayment deduction operation, interest rate adjustments will no longer be made. If there is any remaining principal that has not been returned, any meeting the conditions of the Notice may be subject to interest rate reduction.

Secondly, if an early repayment application has been submitted but the deduction has not been completed, the customer may cancel the early repayment application according to their own needs. Any application that meets the conditions of the Notice will be included in the scope of this adjustment.

Question 7: What specifically refers to the exchange of new loans and the negotiation of changing contract interest rates? What is the difference?

ICBC: New loan replacement refers to the issuance of a new loan by the original lending bank, and the borrower uses this loan to replace the existing first home loan.

Negotiating to change the contract interest rate refers to the negotiation between the lending and borrowing parties to lower the interest rate level agreed upon in the loan contract through signing supplementary clauses and other means.

For borrowers, as it is clear that the adjusted interest rate level needs to comply with the lower limit of the local mortgage interest rate policy at the time of the original loan disbursement, there is no significant difference in the results of these two methods of adjustment.

Considering the convenience of operation, ICBC mainly adopts the method of changing the contract interest rate, which will be subject to ICBC's subsequent announcements.

Agricultural Bank of China: The method of negotiating to change the agreed interest rate in the contract refers to Agricultural Bank of China adjusting the interest rate level in the loan contract through negotiation for loans that meet the standards of the first housing stock.

The new loan replacement method refers to the borrower applying for a new loan from the Agricultural Bank of China loan handling bank to replace the original loan.

According to the requirements of the Notice, the adjusted housing loan interest rate shall not be lower than the lower limit of the commercial personal housing loan interest rate policy for the first housing in the city where the original loan was issued, and the pricing level of the two adjusted interest rates shall be consistent. Agricultural Bank of China mainly adopts the method of negotiating and changing the agreed interest rate in the contract.

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