What does it mean to change the benchmark interest rate to Lpr?
The conversion of the benchmark interest rate to LPR means that the house is loaned at the old fixed interest rate. After this conversion, they will become houses with loans at LPR interest rates. Simply put, converting the benchmark interest rate into LPR means that the interest rate calculated by the loan will change. Of course, this transformation is based on our own decision, that is, the bank will remind us whether to carry out the transformation. If the choice is yes, then we must re-sign the contract, otherwise we don't care.
Before, our mortgage was based on the fixed interest rate of the central bank, and then floated or discounted. After we convert the benchmark interest rate into LPR, the current mortgage floating ratio or discount will be converted into the equivalent LPR basis point, which will remain unchanged. Some people here may say, hasn't this change changed? Actually, it is not, because the benchmark interest rate LPR changes every month, so the overall mortgage interest rate will also change according to this rhythm.
In this regard, if we think that the long-term interest rate in the financial market is declining, then we'd better convert it into LPR, so that the future interest rate will be much lower. Otherwise, we can maintain the status quo.