Regarding existing mortgage interest rates, the central bank makes another statement
On September 20, the State Council Information Office held a regular briefing on State Council policies to interpret the economic situation and policies. Zou Lan, director of the Monetary Policy Department of the People's Bank of China, said in response to reporters' questions that it is understood that the reduction of existing mortgage interest rates has been actively and effectively promoted. Considering that the duration of a mortgage can be up to 30 years, and that there are large differences in time, region, and individual loans, after the announcement of the policy to reduce the interest rate on eligible first-home mortgages, the People's Bank of China has maintained close communication with major banks and guided banks to refine policy implementation plans in accordance with the principles of marketization and rule of law to provide convenience to borrowers as much as possible.
On September 7, four major state-owned banks issued an announcement stating that for existing floating-rate first-home loans priced with reference to loan market quoted interest rates, they will proactively adjust interest rates in batches on September 25, which is the first day of policy implementation. The entire process does not require any action by the borrower. For other situations such as "converting second home to first home", borrowers can apply to the bank and provide supporting materials starting from September 25, and the bank will make batch adjustments to the approved businesses. The interest rates for most existing first-home mortgages that meet the requirements will be reduced to the quoted interest rate. After May 2022, the interest rate will be reduced to the quoted interest rate minus 20 basis points, directly lowering to the lower limit of the policy. Small and medium-sized banks are also successively formulating and issuing implementation details with reference to state-owned banks. It is expected that more than 90% of eligible borrowers can fully enjoy the policy dividends as soon as possible, and the existing mortgage interest rates of other borrowers will also be adjusted before the end of October.
Zou Lan said that the reduction in existing mortgage interest rates can save residents’ interest burden and significantly enhance their spending power. The benefits of this policy adjustment are mid- to long-term, and can sustainably reduce expenditures for households that have taken loans with higher interest rates in recent years, support the improvement of residents' spending power, and effectively promote consumption growth.
