The article said that the People's Bank of China authorized the National Interbank Lending Center to announce that the loan market quotation rate (LPR) on December 20 was 3.45% for a one-year term and 4.2% for a five-year term, which were the same as last month. This is since August this year, LPR has been "unchanged" for four consecutive months.
Experts believe that the cumulative effect of the downward adjustment of LPR this year is showing, which has strongly supported the economic recovery. In order to promote the stable and stable decline of social comprehensive financing cost, there is still a moderate downward space for the subsequent LPR.
Caused by multiple factors
"The LPR continued to be 'on hold' in December, mainly related to the MLF policy rate remained unchanged, market interest rates continued to run at a high level, and bank net interest margins continued to be under pressure." Wen Bin, chief economist at Minsheng Bank.
MLF interest rate is the pricing anchor of LPR, and its change will have a direct and effective impact on LPR. On December 15, the People's Bank of China's additional volume parity continued to make 650 billion yuan MLF, and the winning interest rate remained unchanged at 2.75%, making the space for December LPR reduction significantly reduced.
At present, the market interest rate continues to run at a high level, DR001 (interbank market 1-day bond pledge repurchase rate) and DR007 (interbank market 7-day bond pledge repurchase rate) are around 1.6% and 1.8%, respectively. Wang Qing, chief macro analyst of Oriental Jincheng, believes that in the context of the recent large-scale issuance of government bonds, although the People's Bank of China continued to increase the amount of MLF in November and December, the overall market capital is still tight. This means that the recent wholesale funding costs of banks in the money market have risen significantly, which will weaken the motivation of quotation banks to actively lower LPR quotation points.
In addition, commercial banks' net interest margins remain under pressure. Wen Bin believes that the pressure on the bank's net interest margin is difficult to change in the short term, and the motivation and space for LPR quotations to continue to decline are limited.
Zhou Maohua, macro researcher of the financial market department of Everbright Bank, said that the macroeconomic data in November showed that China's domestic demand was steadily repaired, the real economy loan and social finance performance exceeded expectations, and credit was stable and moderate growth, reflecting that the loan market interest rate was in a reasonable range, and the urgency of LPR reduction was not high in the short term.
The article said that the People's Bank of China authorized the National Interbank Lending Center to announce that the loan market quotation rate (LPR) on December 20 was 3.45% for a one-year term and 4.2% for a five-year term, which were the same as last month. This is since August this year, LPR has been "unchanged" for four consecutive months.
Experts believe that the cumulative effect of the downward adjustment of LPR this year is showing, which has strongly supported the economic recovery. In order to promote the stable and stable decline of social comprehensive financing cost, there is still a moderate downward space for the subsequent LPR.
Caused by multiple factors
"The LPR continued to be 'on hold' in December, mainly related to the MLF policy rate remained unchanged, market interest rates continued to run at a high level, and bank net interest margins continued to be under pressure." Wen Bin, chief economist at Minsheng Bank.
MLF interest rate is the pricing anchor of LPR, and its change will have a direct and effective impact on LPR. On December 15, the People's Bank of China's additional volume parity continued to make 650 billion yuan MLF, and the winning interest rate remained unchanged at 2.75%, making the space for December LPR reduction significantly reduced.
At present, the market interest rate continues to run at a high level, DR001 (interbank market 1-day bond pledge repurchase rate) and DR007 (interbank market 7-day bond pledge repurchase rate) are around 1.6% and 1.8%, respectively. Wang Qing, chief macro analyst of Oriental Jincheng, believes that in the context of the recent large-scale issuance of government bonds, although the People's Bank of China continued to increase the amount of MLF in November and December, the overall market capital is still tight. This means that the recent wholesale funding costs of banks in the money market have risen significantly, which will weaken the motivation of quotation banks to actively lower LPR quotation points.
In addition, commercial banks' net interest margins remain under pressure. Wen Bin believes that the pressure on the bank's net interest margin is difficult to change in the short term, and the motivation and space for LPR quotations to continue to decline are limited.
Zhou Maohua, macro researcher of the financial market department of Everbright Bank, said that the macroeconomic data in November showed that China's domestic demand was steadily repaired, the real economy loan and social finance performance exceeded expectations, and credit was stable and moderate growth, reflecting that the loan market interest rate was in a reasonable range, and the urgency of LPR reduction was not high in the short term.
Cumulative effect appears
Looking at the LPR trend since the beginning of this year, the LPR of 1 year and more than 5 years has been reduced by 20 basis points and 10 basis points respectively. It promotes the further decline of corporate and residential loan interest rates, and the cumulative effect of enhancing the investment and consumption power of corporate residents is emerging.
Interest rates on corporate loans have fallen to historic lows. According to the data of the People's Bank of China, the interest rate of enterprise loans from January to November was 3.89%, down 0.3 percentage points year-on-year, and continued to remain at a historical low since the statistics were collected, which effectively enhanced the impetus for the recovery and development of the real economy.
From the perspective of mortgage rates, the decline is obvious. According to the "Report on the Implementation of China's Monetary Policy in the third Quarter of 2023", in September 2023, the weighted average interest rate of newly issued personal housing loans was 4.02%, down 0.32 percentage points year-on-year. By the end of September, the interest rate of more than 22 trillion yuan of outstanding mortgages had been lowered, and the adjusted weighted average interest rate was 4.27%, an average decrease of 73 basis points; At the same time, among the 343 cities (prefectures and above) in the country, 119 cities that meet the conditions for relaxing the lower limit of the first mortgage interest rate policy have relaxed the lower limit.
It is worth noting that as the New Year approaches, some stock mortgages will also usher in repricing. If the buyer chooses a repricing date of January 1, in accordance with the reduction of the LPR for more than 5 years, its mortgage interest rate will be reduced by 10 basis points on January 1 of the following year. If you take a commercial loan of 1 million yuan and 25 years with the same amount of principal and interest repayment as an example, you can save 57.67 yuan in a month and 692.04 yuan in a year.
The downside is expected to narrow
The Central Economic Work Conference called for a steady but steady decline in the overall financing cost. Experts believe that this means that there is still a moderate downward space for LPR in 2024, which will promote the downward cost of financing and activate the demand for production and consumer credit.
Wang Qing analysis, in the expectation that the price level will remain low, focusing on boosting domestic demand and supporting the resolution of local debt risks, the People's Bank of China will have room to cut interest rates and reduce the reserve ratio in 2024. Based on macroeconomic trends, the MLF interest rate is likely to be lowered once in the first half of 2024, and the LPR of the two maturity varieties will follow up with a downward adjustment, thus promoting a stable and stable decline in the social comprehensive financing cost.
In Wang Qing's view, even if the MLF interest rate remains unchanged in 2024, and the LPR offer of more than 5 years is not adjusted, the policy side will guide the residential mortgage interest rate to go down significantly by comprehensively lowering the lower limit of mortgage interest rates.
"At present, the domestic economy has not recovered to the potential level, and under the expectation of increasing counter-cyclical and cross-cyclical adjustment, it is expected that the LPR will be reduced to a certain extent in the future." Zhou Maohua said that considering that the pressure on the bank's net interest margin will take some time to ease, it is expected that the subsequent downward LPR will require the support of relevant policies such as the central bank's "quantity + price + reform" and guide the market interest rate center to further move down.
Experts said that considering the phenomenon of "upside down" of some deposit and loan rates in the current credit issuance process, and the appeal of commercial banks to stabilize the interest margin still exists, it is expected that the further downward space of LPR and new loan rates will be narrowed.
"The cost control effect of bank liabilities is also an important factor affecting the LPR downward space." Wen Bin expects that in 2024, there will still be measures to control the cost of bank liabilities, such as continuing to reduce the listed interest rate of deposit or the MPA (macro-prudential assessment) assessment ceiling; We will further self-discipline and standardize high-interest active debt products such as agreements, notices and agreements, and promote small and medium-sized banks to reduce long-term deposit interest rates.
