Mortgage interest rates choose to link with the LPR customers, but also not the central bank interest rate cuts the mortgage rate will be immediately reduced. It is not true that mortgage rates become floating after linking with LPR, but they do not float every month.
Generally, when a lender applies for a mortgage they will agree with the bank on an interest rate change cycle, and the minimum length of this cycle is one year. So if the loan interest rate change cycle is not enough for one year, even if the central bank cuts the interest rate, it won't make the mortgage amount decrease.
After reaching the cycle of mortgage rate change, the bank will set the mortgage rate for the next cycle based on the latest LPR, and if the LPR falls at this time, then the lender will be able to enjoy the dividends of a lower mortgage rate.
Do you need to go to the bank for a mortgage rate cut
When a mortgage rate is cut, the new interest rate will be calculated automatically, as agreed in the mortgage contract. Now the mortgage interest rate is the LPR + basis point model, if you choose a floating rate, then the mortgage interest will be reduced when the LPR goes down, and in the second year the bank will automatically calculate the interest in accordance with the new interest rate, without the need for the user to go to the bank to handle the additional procedures.
Of course, if converted to LPR + basis points, but a fixed rate is chosen, then the mortgage interest is fixed.
What a mortgage interest rate cut means
Generally, a bank interest rate cut means:
1. Lower interest rates on bank deposits and lower interest rates on loans increase the liquidity of social funds, which may be conducive to the flow of funds to the market;
2. People start to have more money in their hands, which may be conducive to the growth of the stock market, the consumer industry, the service industry and the rebound of the property market.