Mortgage Reform is Not Easing, Totalitarian Mortgage Control Coming

As soon as Chinese speculators think there's easing, they will move capital into real estate. Hence articles like this one, that try to jawbone the market away from housing speculation.

Also note the paragraph near the end that hints about central planning to the max with personalized mortgage interest rates.

iFeng: 人民时评：房贷改革有利于精准调控

The mortgage reform is not for "water release", but for the marketization of interest rates. The overall level of interest rates is basically the same as before, and the actual expenditure on interest is basically unaffected. Promote the reform of mortgage loans to the depth of precision, and implement the development thinking of "people-centered"

Not long ago, the central bank issued a notice saying that since October 8, the newly issued commercial personal housing loan interest rate has been formed by adding the point of the loan market quotation rate (LPR) of the corresponding period in the most recent month. This reform, known as the “New Deal for Housing Loans”, has attracted much attention. Most of the interpretation starts from the interest rate formation mechanism and analyzes the different influences of policies on different housing groups. It is generally believed that the interest burden before and after the reform is quite equal, and the short-term effect on the real estate market is not obvious, and it is more suitable for precise regulation and urban policy.

First of all, the new mortgage policy is an organic component of the interest rate marketization reform. It should be noted that the issuance of housing loans by commercial banks should have a decisive role in the market. However, the current loan interest rate fluctuates according to the benchmark interest rate, and the benchmark interest rate is determined by the administrative department, and the long-term relative stability remains unchanged. Resource mismatch and reduce financial efficiency. Therefore, reference to open market operations, especially LPR, is the key to solving the benchmark and market interest rate "two tracks." Therefore, the interest rate of the mortgage will be “relevant” with the LPR on a monthly basis, which will naturally reflect the fluctuation of the market interest rate in a timely manner, which is conducive to risk release and efficiency improvement. It can be seen that the mortgage reform is not for "water release", but for the marketization of interest rates.

Secondly, the interest rate of mortgage loans has not changed much in general, and it is more suitable for precise regulation and control. The main worry in the market lies in the "willfulness" of the new interest rate formation mechanism. However, in the medium and long term, the fluctuation of the LPR level is not a matter of fact, which basically reflects the ability of the financial services entity economy, and will also be guided by the necessary window. In the short term, “adding points” is also an important means of adjustment. For example, the current interest rate for the first and second homes in Beijing is about 10% and 20% higher than the benchmark interest rate. After the reform, the first set of mortgage interest rates should not be lower than LPR, the second set should not be lower than LPR plus 60 basis points, and then consider the discretion of each city and banks, and the “interest rate repricing” factor in the process of repayment, mortgage The overall level of interest rates is basically the same as before, and the actual expenditure on interest is basically unaffected.

Thirdly, from the perspective of macroeconomic regulation and control, the positioning of “staying and not speculating” has not wavered, and real estate will never become a means of stimulating growth in the short term. In order to avoid the ups and downs of house prices, especially in hotspots, mortgage interest rates, as an important part of the cost of home purchases, must be subject to timely and appropriate pre-adjustment and fine-tuning, and will inevitably obey and serve the goals and overall situation of regulation. On the other hand, the recent construction of various types of affordable and policy-oriented housing, such as Shanghai's inclusion of foreign populations in the scope of the declaration of shared property rights, mostly belong to the category of “first set, first loan”. The loan approval enjoys a certain degree of preferential treatment, in fact, it is diverted. A considerable part of the credit demand has supported the overall stability of the mortgage interest rate.

It should also be noted that some local mortgage policies have a tendency to be misplaced and offside. For example, some banks have tightened their demand for improvement and even refused to lend. Some banks have artificially delayed the approval time because of the deviation of their credit line or the pace of delivery. In order to stabilize housing prices, some cities have set unreasonable restrictions on the duration of payment and the amount of payment for the provident fund loan customers. The rigid and improved demand group is mainly for the working class. The big data era can fully evaluate it in detail, and the “one-size-fits-all” policy of “no difference” is transformed into precise policy. In this regard, the comprehensive deepening of housing credit reform in the future must focus on differentiated, personalized and accurate high-quality financial services.

The development of the real estate market, in the final analysis, must implement the "people-centered" development thinking; the regulation of the real estate market will eventually focus on the main line of common prosperity. Since the reform and opening up, the per capita housing area of ​​the city has jumped from 6.7 square meters to 36.6 square meters, which is a remarkable achievement. Looking forward to the real estate market in the second half of urbanization, we have a dynamic micro foundation, a solid and reliable meso-protection, and a multi-dimensional and efficient macro tool. As long as we rely on scientific planning, reasonable guidance, and prudential supervision, we can achieve Live the goal of living.