Mortgage Rates Hit a Turning Point: Banks Speed Up Revaluation Cycle Amid Normalized Adjustment

● Our reporter Shi Shiyu

On November 3, a reporter from China Securities News learned that some banks have started accepting requests for adjustments to the current mortgage interest rate revaluation cycle. “On the morning of November 1st, I applied for a revaluation cycle adjustment from 12 months to 3 months on the Bank of China App. In the afternoon of the same day, I received a text message reminding me that the change request was approved.” Ms Bai from Shenzhen said. to a Reporter, “The latest loan revaluation date after the adjustment happened to be November 3. Today we found that the revaluation has been completed and the loan interest rate has dropped to 3.3%.”

On October 31, many commercial banks such as the Industrial and Commercial Bank of China, the Agricultural Bank of China, and the China Construction Bank issued announcements that, starting from November 1, they will gradually implement new pricing mechanisms for commercial personal housing loan interest rates, including adjusting the interest rate plus point value and revaluation of the interest rate pricing cycle.

Shorten the revaluation cycle

“My original loan revaluation date was June 11. After adjusting the loan revaluation cycle to quarterly, the next revaluation date is December 11. From the point of view of the repayment plan, I can enjoy 3.3 half a year in advance. Interest rate %,” Mr. Bian of Nanjing told reporters.

In this revaluation cycle adjustment, borrowers can choose one of three cycles of 3 months, 6 months, and 12 months for revaluation. For example, the borrower’s previous loan revaluation date was 15 March.

Wang Qing, chief macro analyst of Oriental Jincheng, said this policy removes the previous restriction on the shortest revaluation cycle of mortgage interest rates for one year. Shortening the adjustment cycle for existing mortgage interest rates means that the link between existing mortgage interest rates and new mortgage interest rates will be further strengthened, weakening the need for borrowers to choose to repay their loans early because the difference in the interest rate between the new and the old. mortgages, and also avoid the interest rate factor It affects the use of housing residents and is favorable to promote the recovery of the real estate market.

However, some banks remind borrowers that each mortgage loan has only one chance to adjust the revaluation cycle before the loan is settled, and multiple adjustments are not allowed. Modifications cannot be undone, so you should choose carefully after considering various factors.

Many banks said that a shorter revaluation cycle is not necessarily more appropriate. In a down loan interest rate phase, the shorter the revaluation cycle, the sooner borrowers can enjoy low interest rates, conversely, in an up loan interest rate phase, the shorter the revaluation cycle, the the sooner borrowers have to bear high interest rates; .

Dynamically adjust interest rates

Starting from 1 November, existing mortgage interest rates have entered a phase of normalized adjustment. When the borrower’s current mortgage interest rate plus 30 basis points is higher than the national average new mortgage interest rate plus 30 basis points in the previous quarter, the borrower can apply to reduce the plus point to the average new mortgage interest rate national plus 30 basis However, after the adjustment the point value of the mortgage cannot be lower than the lower limit of the local mortgage interest rate policy.

The People’s Bank of China will publish the average interest rate of newly issued housing loans nationwide in the last quarter at the end of January, April, July and October. Borrowers can log on to the official website of the People’s Bank of China to inquire.

Regarding this change, the relevant person in charge of the People’s Bank of China said that both parties can adjust the point increase range through negotiation and contract changes, etc., to more accurately reflect changes in market supply and demand, borrower’s risk premium and other factors.

“The market competition mechanism can encourage commercial banks to negotiate independently with borrowers and adjust the point increase range in a timely manner. It does not need to wait until the interest rate difference between old and new mortgages has accumulated to be large before commercial banks do that. Batch adjustments can mitigate conflicts in a gradual and orderly manner and maintain the Severity contract,” explained the relevant person in charge of the People’s Bank of China.

Analysts believe that the new existing mortgage loan pricing mechanism can enable existing mortgage interest rates to reflect changes in the pricing benchmark (LPR) in a timely manner. At the same time, establishing a regular adjustment mechanism for existing mortgage interest rates will help to stabilize the volume of existing mortgage loans and continue to improve market confidence.

Reception times vary slightly

The time when each bank starts accepting adjustments to the revaluation cycle varies. The reporter learned that Bank of Communications, basically in conjunction with Bank of China, also received and completed adjustment requests from some borrowers. In addition, a number of state-owned banks, joint-stock banks, city commercial banks and other banks announced that they will start accepting applications for circulation adjustments no later than November 15.

Taking the six major state-owned banks as an example, the Bank of China said that starting from November 1, borrowers can log into the bank’s mobile banking app and apply for an adjustment of interest rate points or a revaluation cycle through “Loan-Mortgage Interest Rate Adjustment”. China Post Savings Bank said borrowers can apply to the bank to adjust the revaluation cycle, starting from November 7, If the conditions are met, the bank will make timely adjustments.

The Industrial and Commercial Bank of China, the Construction Bank of China, the Agricultural Bank of China, and the Bank of Communications all said they will begin accepting applications for circulation adjustments no later than November 15.

Among them, the Agricultural Bank of China said that if the revaluation date is chosen to be the loan issuance date, starting from 21:00 on November 1, the borrower can apply for a revaluation cycle adjustment through the Agricultural Bank of China self-service mobile banking. If the conditions are met, the bank will On 5 and 6 November, general adjustments will be made based on the status of the application. If a request for a revaluation cycle adjustment is submitted after November 5 (inclusive), if the conditions are met, the bank will complete the adjustment the day after the date of the request.

(Editor: Wen Jing)