Shenzhen, the “depression” of the national mortgage rates, also began to raise interest rates.
On May 6, Shenzhen CCB issued an internal notice that it would increase the mortgage rates for the first and second suites by 15BP and 35BP, making it the first bank in Shenzhen to explicitly raise mortgage rates.
A local joint-stock bank branch source told brokerage China that his bank might follow suit in the near future. In Guangzhou, several banks have adjusted mortgage rates three times this year. Shenzhen CCB takes the lead in raising mortgage rates
On May 6, Shenzhen CCB confirmed to the brokerage China reporter that it will adjust the mortgage interest rate from May 6 onwards, with LPR+45BP (equivalent to 5.10%) for the first suite and LPR+95BP (equivalent to 5.60%) for the second suite, up 15BP and 35BP respectively. At the same time, in order to reflect the support for the middle and low income people to purchase the security type commercial housing, CCB maintained the same interest rate for the security type commercial housing loans, that is, the implementation of LPR+30BP (equivalent to 4.95%).
The brokerage China reporter contacted other large state-owned banks in Shenzhen to inquire about the situation, but did not receive a reply at press time. The industry expects that CCB’s practice may be followed by other banks. A local Shenzhen joint-stock banker told reporters that his bank may also follow suit in the near future.
The LPR reform was launched in August 2019, when the lower limit for mortgage rates was set at no less than LPR for the first suite and no less than LPR + 60 basis points for the second suite. Under the framework of “one city, one policy”, the central bank’s provincial branches can set the local “plus point level” according to the city, but the upper limit is not clear. Shenzhen mortgage rates are the lowest among first-tier cities
Li Yujia, chief researcher of Guangdong Housing Policy Research Center, said that in October 2020, the national mortgage interest rates rose for the first time after terminating the “nine consecutive decreases”, but for Shenzhen, the first mortgage interest rate has fallen for 27 consecutive months since August 2018, and the average interest rate for the second mortgage is 5.25%, which is the lowest level since 2017. the lowest level since. Since June 2020, the average interest rate for first mortgage in Shenzhen has remained at 4.98%, and the same was true for the month of April just past.
According to Li Yujia’s observation, the second mortgage rate in Shenzhen has also been declining in recent years, from 5.51% in early 2020 to 5.25%, with the interest rate level ranking behind the 10 major cities and significantly lower than that of North, Shanghai and Guangzhou. In addition, the level of the first mortgage rate in Shenzhen (4.98%) is just 27 basis points lower than the second mortgage rate (5.25%).
Property market regulation, the most critical is to hold the financial gate, Shenzhen should be the most stringent regulation of the city, why mortgage rates do not rise but fall? Li Yujia analysis, the reason behind may be Shenzhen financial institutions, the financial market competition is very fierce, and mortgage is a high-quality assets, financial institutions through low interest rates to occupy market share.
“A friend from a large state-owned bank told me that the lowest interest rate for mortgage loans in their Shenzhen branch is LPR+20 basis points, while Guangzhou and Foshan are LPR+40 and LPR+60 respectively. why is this the case? The friend said, Shenzhen financial institutions, banks, small loans, private equity, guarantees, etc., the financial market is very competitive, and mortgage loans are recognized as high-quality assets. The only way to get more market share is to lower the interest rate, while the Bank’s market share will drop if the interest rate is raised.” Li Yujia said.
Li Yujia believes that this round of regulation in Shenzhen, the biggest problem in finance, especially in controlling the leverage speculation, operating loan irregularities into the property market, has been repeatedly criticized, so the financial sector should accelerate the construction of long-term mechanism. On the other hand, the current housing prices in Shenzhen, just the most injured, the need for differentiated implementation. He said that this move means that Shenzhen is working on the differentiation and refinement of housing loans. Guangzhou has raised mortgage rates one after another since this year
Around 2021, Guangzhou property market is hot, the big state-owned banks began to act, since January the first set of mortgage rates, and for three consecutive months there was a rebound.
On April 28, Guangzhou ICBC and Agricultural Bank adjusted the first set of mortgage rates to a minimum LPR+75BP (5.4%) and the second set of mortgage rates to a minimum LPR+95BP (5.6%), up 10 BP each compared to the beginning of the month, which is the third adjustment in Guangzhou this year and the second adjustment in April.
Currently, the minimum LPR+75BP (equivalent to 5.40%) for the first set of mortgage in Guangzhou, and the minimum LPR+95BP (equivalent to 5.60%) for the second set of mortgage.
Li Yujia said, compared to Shenzhen, Guangzhou’s mortgage market competition is not so fierce, and the head office also has to assess branch profits, “to protect profits” will have to raise interest rates, and market share will not decline significantly.
Currently, the lowest first mortgage rate in Beijing is LPR+55BP (equivalent to 5.20%), and the lowest second mortgage rate is LPR+105BP (equivalent to 5.70%); the lowest first mortgage rate in Shanghai is LPR+0 (equivalent to 4.65%), and the lowest second mortgage rate is LPR+60BP (equivalent to 5.25%).
The new round of real estate regulation implemented around 2021, focusing on the use of financial instruments, including the implementation of bank real estate loan concentration management, strict investigation of the irregular flow of credit funds into the real estate sector around the world, and so on. Some industry insiders told brokerage China that with the implementation of real estate loan concentration management, the total amount of bank housing mortgage loans was limited, giving some banks an incentive to raise mortgage rates to make up for the volume with price.
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