At present, the mortgage interest rate is at a relatively low historical level, and mortgage applications pay attention to these points.
The benchmark interest rate for provident fund loans is 3.25%, which is a better choice.
The mortgage interest rate is lowered, and the cost of buying a house is reduced.
On May 20th, the central bank lowered the quoted market interest rate (LPR) of loans over five years by 15 basis points to 4.45%, which is the largest adjustment of LPR over five years since the establishment of the LPR mechanism in 2019. The data shows that, as far as the current mainland interest rate level is concerned, it is currently at a relatively low historical level. The adjustment of mortgage interest rate means that the monthly supply amount is reduced and the cost of buying a house is reduced. According to industry insiders, there are many things to pay attention to in the downward stage of interest rates, whether to buy a home or not, and how to apply for a more favorable mortgage interest rate.
Text/Figure Guangzhou Daily All-Media Reporter Liu Liqin
Pay attention to the agreed time line for handling loans when waiting for preferential interest rates.
Recently, with the downward adjustment of mortgage interest rate, the market is also undergoing subtle changes.
Miss Zhao recently bought a house to improve her residence. After paying the down payment, she negotiated with the sales department to apply for a mortgage. She found that there were many banks on site to provide consultation. One bank said that she could apply for a mortgage interest rate of 5.0%, while the other bank said that according to her stable work and strong income and repayment ability, she and her husband were confirmed as high-quality customers of the bank and could apply for a loan of 4.8%, that is, LPR plus 20 basis points.
Miss Zhao immediately decided to choose a bank offering a more favorable interest rate to handle the mortgage loan, but in the process of handling it, the LPR for more than five years was lowered to 4.45%, so the mortgage interest rate of Miss Zhao was finally set at 4.65%.
In fact, since the mortgage was loosened in November 2021, in the past six months, the national mortgage interest rate has dropped by more than 50 basis points, and some cities have dropped by 100 basis points.
The mortgage interest rate changed quite rapidly in May. As of May 28th, the average interest rate of the first home loan and the second home loan in 32 key first-and second-tier cities monitored by Kerui was 4.5% and 5.2%, respectively.
[suggestion]
Faced with the downward trend of mortgage interest rate, industry insiders said that buyers often communicate with several banks to choose banks that offer more favorable interest rates according to their own work income and repayment ability.
It should be noted that there is a certain time lag between the mortgage interest rate policy and the bank’s implementation, which also has an impact on some ongoing transactions. Recently, some property buyers have chosen to suspend the loan approval process and re-apply for more favorable interest rates in the face of lowered interest rates. Need to be reminded that buyers need to pay attention to the mortgage processing time agreed in the purchase contract. If the application time is too long to obtain interest rate concessions, there may be a breach of contract and losses. Therefore, it is best to confirm the approval time with the bank.
How many times can the couple borrow the provident fund?
Compared with commercial loans, the benchmark interest rate of provident fund loans is 3.25%, which is naturally a better choice. It is the third time for Mr. Li’s family to buy a house. Both of the two properties purchased in the early years used provident fund loans, one of which has been sold and the remaining one has been settled. Hearing that the provident fund can be used twice, Mr. Li was very surprised. Using the provident fund loan to buy a house again can save a lot of interest.
According to "Guangzhou Provident Fund Personal Housing Loan Measures", each paid employee can use provident fund loans twice, and the number of family housing units is "recognized" and "recognized", and differentiated down payment and interest rate policies are implemented. Then both husband and wife have paid the provident fund, how many times can they borrow it?
Mr. Li told reporters that they only knew through inquiry that one of the two previously purchased suites used his wife’s name to apply for provident fund loans, and the other was jointly applied by the two. After paying off the loan, Mr. Li still has a place to use the provident fund loan. This time, Mr. Li applied for a provident fund loan of 600,000 yuan.
The reporter consulted the Guangzhou Housing Provident Fund Management Center and learned that the husband and wife can theoretically borrow up to four times, but from the specific situation, some families do not need to borrow many times. Mainly depends on the family’s real estate and loan situation at the time of application.
If the husband has bought two suites, but he and his wife have never used the provident fund, he can still apply for provident fund loans twice as long as he sells both suites and has no real estate in the family name. If the loans of the two suites are paid off and sold, he can borrow again in the name of his wife.
The single-person provident fund loan amount is 600,000 yuan, and the double-person loan amount is 1 million yuan. In actual application, many people apply together in the name of husband and wife, so they can’t have four chances.
[suggestion]
Property buyers who have used provident fund loans can check the quota of provident fund loans through banks or provident fund management centers when applying for loans. If there are still quotas, they can use them as much as possible.
Whether it is cost-effective to repay the mortgage in advance needs comprehensive consideration.
Due to the downward trend of mortgage interest rate, the mortgage interest rate approved by some property buyers has been high. Even if the LPR is lowered, the plus point is unchanged. How to deal with it? Some people will choose to repay the loan in advance.
According to the social financing data released by the People’s Bank of China in February and April, the newly-increased medium-and long-term loans of residents are negative, which shows that some people are actively choosing to reduce their liabilities. At the same time, at the end of April, many banks lowered their deposit interest rates. Taking the four major state-owned banks as examples, they lowered the interest rate of three-year fixed deposits from 3.25% to 3.15%, and the interest rate of three-year certificates of deposit from 3.25% to 3.15%. Savings have increased, while the rate of return on low-risk assets has gradually declined, which has increased residents’ willingness to repay their mortgages in advance.
In the case that the approved mortgage interest rate is higher than the current mainstream interest rate, can I choose to repay the loan in advance?
According to the test case of Founder Securities Research Institute, in the upward cycle of real estate, if you buy a house in 2018 with a relatively high mortgage interest rate, you apply for a commercial loan of 1 million yuan, the loan period is 30 years, and the mortgage interest rate is 5.7%, and the first repayment is made in October 2018. If you choose to pay it off in one lump sum in October 2022 after four years of repayment, you will finally pay 949,400 yuan in the form of equal principal and interest.
If this 949,400 yuan is used for financial management, the annual income can reach 28,500 ~ 38,000 yuan with a yield of 3% ~ 4%. In contrast, the financial return rate is above 3.5%, so it is not cost-effective to repay in advance, and it is even more difficult to ensure that it is cost-effective at other times.
[suggestion]
According to insiders, due to different interest-bearing methods, it is not possible to simply compare the financial yield with the mortgage interest rate to measure whether it is cost-effective for residents to repay loans in advance, but to analyze specific problems. In addition to the mortgage interest rate and financial yield, it also needs to be evaluated by many factors such as repayment time, repayment method and repayment period.