The six major banks will implement a new pricing mechanism for personal housing loan interest rates starting from November 1, in accordance with the requirements of the People's Bank of China. Borrowers can apply to adjust the LPR spread for their housing loans if it exceeds the national average spread for newly issued personal housing loans by 30 basis points. The repricing period can be adjusted to three or six months, and lenders can choose the optimal strategy based on market changes
Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank announced today (31st) that starting tomorrow (November 1st), they will successively implement a new pricing mechanism for commercial personal housing loan interest rates. This also means that the requirements for improving the pricing mechanism for commercial personal housing loan interest rates issued by the People's Bank of China a month ago will officially take effect.
According to the announcement, for existing personal housing loans with floating interest rates, which are quoted based on the Loan Prime Rate (LPR) plus or minus points, if the interest rate adjustment value exceeds the national average adjustment value for newly issued personal housing loan interest rates by 30 basis points, borrowers can apply to the bank to adjust the LPR adjustment value. The adjusted adjustment value will be the national average adjustment value for newly issued personal housing loan interest rates plus 30 basis points. The national average adjustment value for newly issued personal housing loan interest rates is calculated by subtracting the corresponding quarterly five-year LPR average from the latest weighted average interest rate for newly issued personal housing loans published by the People's Bank of China. If there is a lower limit for personal housing loan interest rate policies in the region, the final adjustment value cannot be lower than the local city's housing loan interest rate adjustment policy lower limit.
In addition, for many borrowers who previously believed that the loan interest rate repricing cycle was uniformly set at one year, which could not timely reflect changes in market supply and demand and easily caused excessive interest rate differentials between new and old housing loans, the announcement from the six major banks clearly cancels the restriction that the minimum repricing cycle for housing loan interest rates is one year. Borrowers can request the bank to adjust the repricing cycle to three months or six months at any time, or they can choose to keep it at one year. It is important to note that during the entire repayment period, the housing loan interest rate repricing cycle can only be adjusted once. This also means that if borrowers believe that future loan interest rates will decline, adjusting the housing loan interest rate repricing cycle to three months may allow them to enjoy the benefits of a decrease in the Loan Prime Rate (LPR) sooner; if borrowers believe that future loan interest rates will rise, keeping the housing loan interest rate repricing cycle at one year may result in their housing loan interest rates following the increase in the Loan Prime Rate (LPR) later.
Previously, at the end of September, the People's Bank of China issued an announcement to better reflect changes in market supply and demand and protect the legitimate rights and interests of both borrowing parties. Starting from November 1st, it will improve the pricing mechanism for commercial personal housing loan interest rates. The focus of the improvement is that when the floating interest rate for commercial personal housing loans deviates from the national newly issued commercial personal housing loan interest rates by a certain extent, borrowers can negotiate with the bank to change the adjustment range of the housing loan interest rate based on the LPR. Another focus is to remove the restriction that the minimum repricing cycle for housing loan interest rates is one year