My mortgage interest rate is much higher than the current rate for the first home in Hangzhou. If only it could be reduced to the same level, "Zhang Chen, a white-collar worker in Hangzhou, told China Securities News. He has recently been very concerned about the discussion of adjusting the interest rate on existing housing loans. Currently, the interest rate on the first home loan in Hangzhou is 4%, while his mortgage interest rate is 5.35%. Zou Lan, Director of the Monetary Policy Department of the People's Bank of China, recently stated that in accordance with the principles of marketization and rule of law, commercial banks are supported and encouraged to negotiate independently with borrowers to change contract agreements or replace existing loans with new ones. The statement by the financial management department responds to social concerns and further leads the topic of adjusting the interest rates of existing housing loans to depth. Experts believe that for homebuyers, reducing the interest rate on existing housing loans can directly alleviate their mortgage payment pressure, unleash residents' consumption potential, and promote consumption growth. For banks, moderately adjusting the interest rates of existing housing loans is expected to alleviate the "wave of early repayment", but it may further put pressure on the bank's net interest margin, and reasonable and feasible solutions need to be explored. At the same time, regulatory authorities can also promote the reduction of bank debt costs by introducing support policies such as lowering reserve requirements, guiding financial institutions to benefit the people and exchange price for quantity. Experts believe that as market interest rates continue to decline, the interest rates on existing housing loans are significantly higher than investment returns such as wealth management. As a result, there is a significant increase in early repayment of housing loans for wealth management products with lower redemption yields among residents. In the first half of this year, a total of 3.5 trillion yuan of personal housing loans were disbursed, exceeding 510 billion yuan more than the same period last year. However, statistical data shows that the overall balance of personal housing loans has slightly decreased. Behind this, some residents' early repayment of their housing loans is an important reason. "It can be observed from the conditional early repayment rate of RMBS (personal housing mortgage loan backed securities) that since 2023, the index has shown a fluctuating upward trend. From June to July, it fell back from the peak in May, but it is still at a high level from 2021 to 2022." Dai Zhifeng, director of Zhongtai Securities Research Institute, said. The RMBS conditional early repayment rate is an important observational indicator of residents' early repayment behavior of personal housing loans. Why do residents choose to repay their loans in advance? Zou Lan stated that although the loan market quoted interest rate (LPR) has decreased by 0.45 percentage points since last year, the interest rate on existing housing loans issued in previous years is still at a relatively high level due to the fixed increase in the contract period, which is largely related to the significant increase in early repayment of loans. "Prepayment of individual housing loans reflects the spontaneous adjustment of residents in asset allocation." Zhang Xu, chief fixed income analyst of Everbright Securities, believes that from the liability side, with the continuous decline of loan interest rates, the interest rates of some loan varieties have been significantly lower than those of some existing housing loans. From the investment perspective, the return on financial assets has decreased in recent years, forming an "inverted" relationship with some existing mortgage rates, making early repayment of loans more cost-effective. Lowering the interest rate on existing housing loans is seen as a good way to curb the "wave of early repayment". Experts point out that adjusting the interest rate of existing housing loans will reduce the monthly supply burden on residents, and for banks, it can alleviate the problem of increasing early repayment of loans. Mingming, chief economist of CITIC Securities, said that commercial banks
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：Securities Daily
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