Which existing first-time housing loans can be applied for interest rate reductions? How to apply?
Officials from the People's Bank of China and the State Administration of Financial Supervision and Administration answered questions from reporters regarding the adjustment and optimization of housing credit policies
On August 31, the People's Bank of China and the State Administration of Financial Supervision jointly issued the Notice on Adjusting and Optimizing Differentiated Housing Credit Policies and the Notice on Reducing the Interest Rate of Existing First Home Loans. The responsible comrades answered questions from reporters regarding policy adjustments.
Q: What is the background for adjusting and optimizing differentiated housing credit policies?
Answer: On July 24th, the Central Political Bureau meeting clarified that in order to adapt to the new situation of significant changes in the supply and demand relationship of China's real estate market, it is necessary to adjust and optimize real estate policies in a timely manner, and make good use of policy toolboxes based on urban policies. On July 31st, the State Council executive meeting proposed to launch policy measures that are conducive to the stable and healthy development of the real estate market according to different needs and cities, and accelerate the research and construction of new development models for the real estate industry.
In order to implement the decisions and deployments of the Central Committee of the Communist Party of China and the State Council, the People's Bank of China and the State Administration of Financial Supervision have issued notices to adjust and optimize the current differentiated housing credit policies, support local governments in implementing policies tailored to urban areas, guide the actual down payment ratio and interest rate of personal housing loans to decrease, and better meet the demand for rigid and improved housing.
Q: What is the focus of the adjustment and optimization of differentiated housing credit policies this time?
Answer: Firstly, unify the lower limit of the minimum down payment ratio policy for commercial personal housing loans nationwide. The minimum down payment ratio policy for commercial personal housing loans for first and second homes will no longer distinguish between cities that implement "purchase restrictions" and cities that do not. The lower limits will be no less than 20% and 30%, respectively.
The second is to adjust the lower limit of the interest rate policy for the second housing to no less than the market quoted interest rate for the corresponding term loan plus 20 basis points. The lower limit of the first home interest rate policy is still no less than the corresponding period LPR minus 20 basis points.
Each region can independently determine the minimum down payment ratio and lower interest rate for the first and second housing units within its jurisdiction based on the principle of implementing policies according to the city and the local real estate market situation and regulatory needs.
Q: Why should we lower the interest rate on existing first-time housing loans?
Answer: In recent years, there have been significant changes in the supply and demand relationship of China's real estate market, and borrowers and banks both demand orderly adjustment and optimization of assets and liabilities. The decrease in interest rates on existing housing loans can save interest expenses for borrowers, which is beneficial for expanding consumption and investment. For banks, it can effectively reduce the phenomenon of early repayment of loans and mitigate the impact on their interest income. At the same time, it can also compress the space for illegal use of business loans and consumer loans to replace existing housing loans, reducing risks and hidden dangers. In order to better adapt to the new situation mentioned above, the People's Bank of China and the State Administration of Financial Supervision have clearly supported and encouraged banks and borrowers to negotiate and adjust the interest rates of existing first home loans in accordance with the principles of marketization and rule of law.
Q: Which existing first-time housing loans can be applied for to lower interest rates? How to apply?
Answer: Qualified stock first home loans refer to commercial personal housing loans for stock housing that have been issued by financial institutions before August 31, 2023, have signed contracts but have not been issued, and the borrower's actual housing situation meets the first home standard in the city.
For eligible stock housing loans, starting from September 25, 2023, borrowers can actively apply to the lending bank, and banks are encouraged to provide more convenient services to borrowers through announcements, batch processing, and other means. In terms of adjustment methods, it is possible to change the housing loan interest rate agreed upon in the contract by a slight increase, or the bank can issue new loans to replace existing loans. The specific adjustment range of interest rates shall be determined through negotiation between the borrowing and lending parties, but the adjusted interest rate shall not be lower than the lower limit of the first housing loan interest rate policy in the city where the original loan was issued. Newly issued loans can only be used to repay existing loans and will still be included in the management of commercial personal housing loans.
The People's Bank of China and the State Administration of Financial Supervision will closely monitor market trends, guide banks and customers to follow the principles of marketization and rule of law for independent negotiations, orderly reduce the interest rates of existing housing loans, and maintain a good market competition order.
