Today (May 20), the quoted interest rate (LPR) of the new phase loan market was released. The people's Bank of China authorized the National Interbank Funding Center to announce that the one-year LPR was 3.7%, unchanged from the previous period; LPR over 5 years was 4.45%, compared with 4.6% previously.

Since the LPR quotation is linked to the medium-term lending facility (MLF) interest rate, the market not only pays attention to the central bank's MLF operating interest rate, but also includes the prediction of the LPR quotation.

On May 16, the central bank announced that in order to maintain the reasonable and abundant liquidity of the banking system, the central bank carried out the MLF operation of 100billion yuan (including the renewal of the MLF due on May 17) and the open market reverse repurchase operation of 10billion yuan on May 16, and the bid winning interest rate remained unchanged.

Previously (on May 15), the central bank and the China Banking and Insurance Regulatory Commission issued the notice on issues related to the adjustment of differentiated housing credit policies, saying that for resident families who purchase ordinary self owned houses with loans, the lower limit of the loan interest rate for the first set of commercial personal housing is adjusted to be no less than the market quotation interest rate of the loan for the corresponding period minus 20 basis points, and the lower limit of the loan interest rate policy for the second set of commercial personal housing is implemented in accordance with the current provisions.

Take the 30-year equal principal and interest repayment of 1million yuan as an example

After the reduction, the monthly supply can be reduced by 89 yuan

Based on the loan interest rate of 4.6% for the first house, the loan is 1million yuan, and the equal principal and interest are repaid for 30 years. The total repayment amount is 1.8455 million yuan, and 5126.44 yuan needs to be repaid every month.

If the loan interest rate of the first house is 4.45%, the loan is 1million, and the equal principal and interest are repaid for 30 years. The total repayment amount is 1.813 million yuan, and 5037.19 yuan needs to be repaid every month.

Reduce by 15 basis points, from the lowest 4.6% to the lowest 4.45%, which means that the monthly energy supply of 1million loans will save 89.25 yuan, and 32500 yuan will be repaid less in 30 years. The LPR quotation exceeded expectations, and the interest rate was not adjusted due to the MLF operation on May 16.

On May 16, the central bank announced that it would carry out a 100billion yuan MLF operation (including the continuation of the MLF due on May 17) and a 10billion yuan open market reverse repurchase operation on the same day, and the bid winning interest rates were 2.85% and 2.1% respectively, both unchanged from the previous time. MLF interest rate cut this month is expected to fail.

It is reported that as the most important policy interest rate, the change of MLF interest rate will affect the interest rates of money market, bond market and deposit and loan market.

At this time, the reduction of MLF interest rate will aggravate the pressure of RMB depreciation and capital outflow. In addition, price pressure will also restrict MLF interest rate reduction. Although the MLF interest rate has not changed, because the cost of bank liabilities has significantly improved, the voice of unilateral reduction of LPR quotation in May is high, so as to achieve the purpose of reducing financing costs.

Expert interpretation:

Yan Yuejin, research director of the think tank center of E-House Research Institute:

It fully reflects the urgency and support orientation of reducing capital costs at present, and has a great impact on the economic development of various industries.

1. LPR down regulation

The five-year LPR data is 4.45%. It has three important characteristics and significance.

1) This adjustment is the first interest rate cut since Premier Li Keqiang held a symposium in Yunnan Province. Li Keqiang stressed that all localities and departments should enhance their sense of urgency,

The new measures that are accurate can be used up, and they can be released in May. This fully reflects the determination of monetary policy in reducing the cost of capital, especially in the medium and long term.

2) This adjustment is the third adjustment of the five-year LPR. The past two reductions were in April 2020 and January 2022 respectively. At the same time, this reduction is the largest, that is, 15 basis points.

This fully reflects the strength and determination of this reduction, and also reflects the important guidance of stabilizing the economic market.

3) This reduction is also inconsistent with the trend of the international market, including interest rate hikes in Europe and the United States. The trend of LPR in China fully demonstrates the stability and sustainability of monetary policy,

The focus is to prevent the economy from continuing to decline, which also makes the market players clearer and clearer about the direction of monetary and financial policies.

2. Policy Significance

The reduction of LPR has a positive and significant impact on the macro-economy and industrial economy, as well as on the real estate market.

1) The loose monetary and financial environment is bound to have a positive and important impact on the real estate market, which is conducive to reducing the cost of house purchase

Reducing the cost of development loans and operating loans will have a positive effect.

2) In practice, the purchase cost of property buyers will obviously have a positive and important impact. Previously, the central bank has clarified the "lpr-20 basis points" housing loan pricing idea,

This LPR cut will also further guide the lower limit of mortgage interest rates. This also means that the current low interest rate of 4.4% in more than 20 cities across the country may not be the lowest interest rate,

The interest rate of subsequent housing loans may be further reduced, and it is entirely possible to have a similar interest rate of 4.2%.

3) This policy will also have an important impact on the financing of real estate enterprises, and play a positive role in actively applying for low-cost development loans,

It is conducive to the reduction of medium and long-term financing costs and operating costs of real estate enterprises.