Is it necessary to reduce the interest rate of real estate loans

On June 6, the people's Bank of China lowered the standard for the first time in 2020, releasing more than 800 billion yuan of long-term funds. On the first day of the new year, the central bank announced that it decided to reduce the reserve ratio of financial institutions by 0.5 percentage points (excluding financial companies, financial leasing companies and auto financing companies) on January 6. The relevant person in charge of the central bank pointed out that this is a comprehensive reduction in standards, reflecting counter cyclical regulation, effectively increasing the stable sources of funds for financial institutions to support the real economy, reducing the cost of funds for financial institutions to support the real economy, and directly supporting the real economy. In the four reductions since 2019, the central bank has reduced the financing costs of small and micro enterprises and private enterprises through three comprehensive reductions and one targeted reduction to support the development of the real economy.

In addition, the reduction also provides support for the stable market capital before the Spring Festival. Zeng Gang, deputy director of the national finance and development laboratory, said that in the short term, the reduction was to release liquidity to meet the peak demand for funds before the Spring Festival and ensure a stable market. "Generally speaking, it is more likely to have the demand for capital investment and return before and after the Spring Festival." Zeng Gang further said that this year's Spring Festival is earlier than previous years, liquidity is facing a small amount of capital maturity pressure, and cash demand is increasing. The central bank announced the reduction of the reserve at the beginning of the month to create a more stable capital interest rate, reflecting the flexibility and moderation of sound monetary policy. Wen bin, chief researcher of China Minsheng Bank, predicted that in the next stage, there is still room and need for a comprehensive reduction of the standard. In combination with targeted reduction, it is expected that there will be another 2-3 times of reduction. CITIC macro said that the timing and strength of the reduction are in line with expectations, and the liquidity gap before the spring festival provides a window opportunity for the moderate widening of the total amount policy. Under the policy keynote of "reducing the cost of social financing", it is reiterated that the orientation of monetary policy for the whole year will be "simultaneous development of price and quantity". The quantity in January takes the lead, and the interest rate is expected to be cut in the second quarter. On January 20, the central bank will announce the market quotation rate (LPR) of new loans.

The industry generally expects that this round of reduction may affect the new LPR quotation by a small margin. According to the report issued by Yiju Research Institute, the changes in monetary policy and financial environment have a relatively obvious impact on LPR quotation mechanism and mortgage interest rate, especially the use of tools including the reduction of reserve, which has a direct impact on currency liquidity and interest rate. Yan Yuejin, research director of the think tank center of E-House Research Institute, told China New Zealand Jingwei client that after the reduction of the standard, liquidity has increased and it is expected that LPR may be reduced. At the same time, the loan work of real estate banks will also be adjusted, which will further reduce the interest rate and cost of real estate loans, ultimately benefit the buyers, and make the work of conversion pricing method of stock floating loans better started in March this year. Huatai Securities Research Report believes that the LPR did not continue to adjust in December last year, but under the requirement of "reducing social financing cost" of the central economic working conference, the central bank's motivation to guide the decline of LPR remains unchanged. It may also be a more appropriate way to reduce the cost of the bank's liability side by reducing the standard, so as to guide LPR to continue to reduce in January this year. Wang Qing, chief Macro Analyst of Dongfang Jincheng, analyzed that the LPR quotation over the next five years may show a slight downward trend, which means that the real estate market will maintain a stable running trend next year, and the risk of significant downward growth of real estate investment is small.

Wen bin estimated that the price of LPR for the new phase is 4.1% for one-year period and 4.75% for more than five-year period. What's behind "Yang Ma"? It's worth noting that some people think it's a signal of "releasing water" after the announcement of the information on January 1. In response, the central bank made it clear that the reduction of the reserve ratio is a hedge against the cash investment before the Spring Festival, and the total liquidity of the banking system will remain basically stable, flexible and moderate, rather than flooding, which reflects the scientific and steady control of the counter cyclical adjustment of monetary policy, and the orientation of sound monetary policy has not changed. In order to deal with the funding gap brought by the maturity of the open market operation Omo, cash withdrawal during the Spring Festival, tax payment and issuance of local bonds, in addition to the reduction of the reserve, what else will the central bank do? Dong ximiao, a special researcher of the national finance and development laboratory, said that the reduction of the reserve in this time particularly stressed that it is conducive to enhancing the financial strength of small and medium-sized banks in serving private and small and micro enterprises, and the next step should continue to optimize the "three grades and two advantages" The deposit reserve ratio policy framework provides more incremental support for small and medium-sized banks and reduces the capital cost of small and medium-sized banks through structural policy tools such as targeted reduction of reserve ratio and targeted medium-term lending facility (tmlf). On January 5, the people's Bank of China held a meeting to clarify the seven priorities of 2020, which mentioned that we should focus on alleviating the financing difficulties of small and micro enterprises and increasing the structural reform on the supply side of financial support. We will promote the joint efforts of multiple departments, make good use of policy tools such as targeted reduction of standards, re loan rediscount, macro Prudential assessment and credit management, and effectively promote the improvement of small and micro enterprise financing. According to the analysis of Guohai Securities Research Report, before the Spring Festival, we can focus on other monetary policy operations to make up the liquidity gap, including reverse repurchase, medium-term loan facility (MLF), mortgage supplementary loan (PSL).