Why is Lpr still displayed when I choose fixed interest rate?
After the user handles the interest rate conversion business and selects a fixed interest rate, it is still displayed as LPR on the page because the current interest rate expression is unified into LPR, and LPR is divided into floating interest rate and fixed interest rate. As long as the user is sure that he is dealing with a fixed interest rate, the LPR fixed interest rate will be displayed on the page.
Therefore, the interest rate displayed on the page is always LPR, but there is a difference between floating interest rate and fixed interest rate. This display will not affect the user's processing results. I want to choose fixed for lpr interest rate conversion, but it shows that it has been priced according to lpr. Is this result correct?
That's correct. Customers can only choose one of the two. We must be clear that the loan calculations given by the bank are very strict and will not be inconsistent with the name.
What should I do if I regret it after passively adjusting the pricing to LPR? Can I still return to the previous fixed interest rate? According to previous announcements issued by the five major banks, after the batch conversion is completed, if you have any objections to the conversion results, you can make a self-service transfer through relevant channels or negotiate with the loan handling bank before December 31, 2020. Before the end of the year, LPR will have four more quotes, so you can wait and see before making a decision.
Many friends recently received SMS notifications that the mortgage interest rate was automatically converted to LPR pricing. I was still debating whether to switch to LPR, why did I just passively switch? Don’t worry, everyone. In fact, the central bank issued a notice on the conversion of mortgage interest rates as early as December last year. The conversion of the LPR pricing benchmark will be completed before August 31 this year. As this point approaches, the five major state-owned banks, ICBC, Agricultural Bank of China, Bank of China, China Construction Bank and Postal Savings Bank of China, simultaneously issued announcements stating that starting from August 25, they will convert batches of those who meet the conversion conditions but have not yet processed the conversion into LPR.
Among those who passively switch to LPR pricing, some do not understand the impact of the switch, and some are converted by default. It has now entered September, and the vast majority of commercial banks have completed stock conversion. In recent months, "whether or not to switch to LPR" has become a "little tangle" among mortgage loan owners. Everyone is mainly worried that after switching, the monthly mortgage payment will increase. As for whether to transfer or not, it depends on the actual situation of the individual.
A staff member of a major state-owned bank told reporters that in fact, lenders do not need to worry too much. From the current point of view, it is cost-effective to switch to LPR pricing, unless the loan period is running out, or it is A situation where loan interest rates are very low. If the previous mortgage interest rate was low, it is not necessary to switch if it is below 4%; if it is higher than 4%, it is more cost-effective to switch to an LPR quote.
Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, also holds the same view. He said that if the loan is to be paid off in the next few years, it doesn't matter if it is not adjusted. But if the remaining time is relatively long, it would be better to follow LPR pricing, and you may enjoy some discounts brought by LPR adjustments in the future. Relevant experts said that the bank's "one-size-fits-all" unified adjustment is to improve conversion efficiency. There is no need to interpret this move as the bank will definitely raise interest rates. After all, the LPR pricing mechanism is market pricing behavior. I originally wanted to fix the interest rate, but why did it change to LPR?
If the setting is wrong, you can change it at the bank counter.
The loan market quoted interest rate (Loan PrimeRate, LPR) is added by a representative quoting bank based on the bank's loan interest rate for the best customers, based on the open market operating interest rate (mainly referring to the medium-term lending facility interest rate) The form of quotation is the basic loan reference interest rate calculated and published by the National Interbank Funding Center authorized by the People's Bank of China
Each financial institution should mainly refer to the LPR for loan pricing. At present, LPR includes two varieties: 1-year term and 5-year term or more. LPR has a high degree of marketization and can fully reflect the supply and demand of funds in the credit market. Using LPR for loan pricing can promote the formation of market-oriented loan interest rates and improve the transmission efficiency of market interest rates to credit interest rates.
On August 12, 2020, five major state-owned banks, ICBC, China Construction Bank, Agricultural Bank of China, Bank of China and Postal Savings Bank of China, simultaneously issued announcements that they would start from August 25 on personal housing loans within the scope of batch conversion. The pricing method will be uniformly adjusted to LPR (Loan Prime Rate) in accordance with relevant rules.
On September 21, 2020, the loan market quoted interest rate was 3.85% for one year and 4.65% for five years. If you choose a fixed interest rate, why is it prompted as the LPR benchmark? Not the People's Bank of China benchmark?
This is not a "pit", let alone a "pit" dug intentionally. The base interest rate and LPR are both announced or authorized by the central bank, and are the basic interest rates for commercial bank loans. It's just that the implementation of "base interest rate" is an old policy, and the implementation of "LPR" is a new policy. If it is an existing loan, there is a conversion issue involved. Let me introduce the relevant situation to you below.
The benchmark interest rate is the deposit and loan interest rate stipulated by the People's Bank of China for national specialized banks and other financial institutions as the benchmark interest rate. LPR is also an interest rate calculated and published by the National Interbank Lending Center authorized by the People's Bank of China. In the past, bank loans fluctuated based on the benchmark interest rate. For example, the five-year loan benchmark interest rate was 4.9%. If it increased by 15%, it would be 4.9%*(100%+15%) = 5.635%; if it fluctuated by 10%, , which is 4.9%*(100%-10%)=4.41%. However, starting from January 1, 2020, the reference basis for bank loan interest rates has changed. On December 28, 2019, the People's Bank of China issued [2019] Announcement No. 30, requiring further promotion of the application of loan prime rate (LPR) and converting the pricing basis of existing floating rate loans to LPR. Existing floating-rate loans refer to "floating-rate loans (excluding provident fund personal housing loans) that have been issued by financial institutions before January 1, 2020 and that have been contracted but not yet issued and are priced with reference to the loan benchmark interest rate." In other words, if the loans that financial institutions have issued or signed contracts but have not been issued before New Year's Day this year, if they are floating rate loans priced with reference to the loan benchmark interest rate, as long as they are not floating rate loans in the last repricing cycle, as long as they are not provident fund individuals Housing loans must be converted from the benchmark interest rate pricing method to the LPR pricing method.
This announcement also clarified that “from January 1, 2020, financial institutions shall not sign floating rate loan contracts that are priced with reference to the loan benchmark interest rate.” In other words, starting from New Year's Day this year, any loan from a financial institution will no longer be based on the benchmark interest rate to determine the loan interest rate.
The "new to old conversion" of loan interest rates faces a "choice between two": if you choose a fixed interest rate, the interest rate level before the conversion will be maintained until the loan is paid off; if you choose a floating interest rate, it will be "LPR" "Added point", the execution interest rate must fluctuate with the LPR at least once a year. LPR is a variable, which is announced by the central bank once a month, with certain fluctuations; "point" is a constant, equal to 4.8% minus the pre-conversion execution interest rate, which is fixed during the current loan period.
If you choose a floating interest rate, if the execution interest rate before conversion is 5.635%, then the execution interest rate formula after conversion will be "LPR+5.635%-4.8%", that is, "LPR+0.835%". If you start switching in July 2020, and the 5-year LPR announced in June 2020 is 4.65%, then your interest rate executed in the next year will be 4.65% + 0.835% = 5.485%.
The answer is complete for your reference. Thanks!
This is a matter of understanding. If the concept of LPR is used to implement it, it is the central bank's base interest rate + commercial bank floating points. In fact, this has the same effect as the previous interest discount, but the right to float the interest rate. Let the commercial banks decide the floating points themselves. The interest rate released by the central bank every year should not have an effect in the later stage of the loan, so the difference is not big. The interest rate is originally a small change. If the loan base is not large, it may not make any sense. As for the price of a house, I have enjoyed the benefits of interest rates for about more than 100 yuan per month, which can save a lot of household expenses. Hopefully it will be a good thing for most families, but there are risks in managing money!
First of all, let me tell you that this is not a trap. Now all loans are linked to LPR.
This year, the People's Bank of China requires commercial banks to implement interest rate transition for newly issued loans and existing loans with a remaining term of more than one year. Loans based on LPR are market-oriented requirements.
In fact, it is not the point whether the loan is based on the base interest rate or the LPR, let alone a pitfall. The point is how you choose, whether you choose a fixed interest rate or a floating interest rate? The current loan interest rate transition is a parity transition, that is, the interest rate before the transition and the interest rate after the transition remain unchanged. For example, if the interest rate of your mortgage before the transition was 5.635%, which was an increase of 15% from the base interest rate, then your loan interest rate based on LPR after the transition will still be 5.635%, and your LPR plus points will be 5.635 minus the latest one. The LPR value for a term of more than 5 years is published regularly, and the points added value remains unchanged during the remaining loan period. If you choose a floating interest rate, then during the remaining period of the loan, if the LPR value increases, your loan interest rate will increase.