Last Friday, the market ushered in a sharp rise, and the rumor of "a reduction in existing mortgage interest rates" once became a key boosting factor for the market rise. However, with the response of the president of China Merchants Bank and the fall of the index, this rumor seems to be put on hold for the time being. But this week, the rumor revived, with Bloomberg reporting citing people familiar with the matter, once again arousing great market concern. This report of not only mentioned the consideration of a reduction, but also elaborated on the steps, extent and time of the reduction. It was clear and precise, which greatly improved the market's expectations for existing mortgage interest rates.
On August 31 last year, the People's Bank of China and the State Administration of Financial Supervision jointly issued the "Notice on Matters Related to Reducing the Interest Rates of Existing First Home Loans". This policy will be implemented from September 25, 2023. According to research statistics from West China Securities, after the policy was implemented, residents' interest burdens were reduced, reducing borrowers' interest payments by about 170 billion yuan each year, benefiting 53.25 million households and about 160 million people. The phenomenon of early loan repayments has slowed down. After the policy was introduced, From September to December, the average monthly prepayment amount of mortgage loans dropped to about 387 billion yuan; residents' consumption demand in areas with larger reductions has relatively improved. For example, in the fourth quarter of 2023, the decline in consumption propensity of urban residents in Hubei and Jiangxi was smaller than the national rate. , shows that in the two areas where existing mortgage interest rates have been significantly reduced, residents' consumption tendencies have recovered relatively quickly.
In the fourth quarter of 2023, the decline in consumption propensity of urban residents in Hubei and Jiangxi was smaller than the national rate (West China Securities Research Institute)
From this, we can roughly draw a conclusion: lowering the existing mortgage interest rates can alleviate residents’ repayment pressure, thereby promoting consumption and improving Revitalize the economy. This may be the original intention of the country to lower existing mortgage interest rates. However, judging from the previous reduction effect, it does not seem to be very obvious. Under the current background of weak consumption and severe economic conditions, this goal may be achieved through another reduction. In fact, the Politburo meeting in July this year proposed "early reserves and timely launch of a batch of incremental policy measures." With reference to the reduction of existing mortgage interest rates from August to September last year, there is a certain possibility of lowering existing mortgage interest rates in the future.
Therefore, even if there are no rumors, it may be necessary to lower existing mortgage interest rates based on policy preferences, the need to stimulate consumption and boost the economy. However, it should be noted that the reduction of existing mortgage interest rates has an important consideration, that is, the interests of banks. If it is lowered again, banks' net interest margins will be further put under pressure. At this time, whether to consider lowering deposit interest rates for hedging has become a new question. As for how to weigh the specifics, I believe the management will have more comprehensive considerations.
For the stock market, the sharp rise last Friday and the stimulation of news and rumors at least revealed a signal: for the restart and recovery of the economy, lowering the existing mortgage interest rate may be an important starting point. The stock market serves as a barometer of the economy, and its responses are often forward-looking. The market performance last Friday gave investors hope and made people full of expectations for future economic trends. Therefore, the purpose of various current policies and measures is to stimulate consumption and boost the economy. If the existing mortgage interest rates are lowered again, it may have an important boosting effect on the market, both from the perspective of market expectations and substantial benefits. Of course, the final trend of the stock market still requires attention to specific changes in fundamentals and liquidity. Before the news is officially confirmed, you should try to stay on the sidelines and wait patiently for market change signals to appear. After all, the stock market is full of uncertainties. Only by remaining rational and calm can we make correct decisions in a complex and changeable market environment.
Last Friday, the market ushered in a sharp rise, and the rumor of "a reduction in existing mortgage interest rates" once became a key boosting factor for the market rise. However, with the response of the president of China Merchants Bank and the fall of the index, this rumor seems to be put on hold for the time being. But this week, the rumor revived, with Bloomberg reporting citing people familiar with the matter, once again arousing great market concern. This report of not only mentioned the consideration of a reduction, but also elaborated on the steps, extent and time of the reduction. It was clear and precise, which greatly improved the market's expectations for existing mortgage interest rates.
On August 31 last year, the People's Bank of China and the State Administration of Financial Supervision jointly issued the "Notice on Matters Related to Reducing the Interest Rates of Existing First Home Loans". This policy will be implemented from September 25, 2023. According to research statistics from West China Securities, after the policy was implemented, residents' interest burdens were reduced, reducing borrowers' interest payments by about 170 billion yuan each year, benefiting 53.25 million households and about 160 million people. The phenomenon of early loan repayments has slowed down. After the policy was introduced, From September to December, the average monthly prepayment amount of mortgage loans dropped to about 387 billion yuan; residents' consumption demand in areas with larger reductions has relatively improved. For example, in the fourth quarter of 2023, the decline in consumption propensity of urban residents in Hubei and Jiangxi was smaller than the national rate. , shows that in the two areas where existing mortgage interest rates have been significantly reduced, residents' consumption tendencies have recovered relatively quickly.
In the fourth quarter of 2023, the decline in consumption propensity of urban residents in Hubei and Jiangxi was smaller than the national rate (West China Securities Research Institute)
From this, we can roughly draw a conclusion: lowering the existing mortgage interest rates can alleviate residents’ repayment pressure, thereby promoting consumption and improving Revitalize the economy. This may be the original intention of the country to lower existing mortgage interest rates. However, judging from the previous reduction effect, it does not seem to be very obvious. Under the current background of weak consumption and severe economic conditions, this goal may be achieved through another reduction. In fact, the Politburo meeting in July this year proposed "early reserves and timely launch of a batch of incremental policy measures." With reference to the reduction of existing mortgage interest rates from August to September last year, there is a certain possibility of lowering existing mortgage interest rates in the future.
Therefore, even if there are no rumors, it may be necessary to lower existing mortgage interest rates based on policy preferences, the need to stimulate consumption and boost the economy. However, it should be noted that the reduction of existing mortgage interest rates has an important consideration, that is, the interests of banks. If it is lowered again, banks' net interest margins will be further put under pressure. At this time, whether to consider lowering deposit interest rates for hedging has become a new question. As for how to weigh the specifics, I believe the management will have more comprehensive considerations.
For the stock market, the sharp rise last Friday and the stimulation of news and rumors at least revealed a signal: for the restart and recovery of the economy, lowering the existing mortgage interest rate may be an important starting point. The stock market serves as a barometer of the economy, and its responses are often forward-looking. The market performance last Friday gave investors hope and made people full of expectations for future economic trends. Therefore, the purpose of various current policies and measures is to stimulate consumption and boost the economy. If the existing mortgage interest rates are lowered again, it may have an important boosting effect on the market, both from the perspective of market expectations and substantial benefits. Of course, the final trend of the stock market still requires attention to specific changes in fundamentals and liquidity. Before the news is officially confirmed, you should try to stay on the sidelines and wait patiently for market change signals to appear. After all, the stock market is full of uncertainties. Only by remaining rational and calm can we make correct decisions in a complex and changeable market environment.
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