In 2021, China’s mortgage interest rates will enter a new model.

01 In 2020, the central bank carried out mortgage interest rate reforms, and all existing mortgage loans faced a "choice between two": either convert to a fixed interest rate, or become an LPR floating interest rate.

Starting from 2021, for those who choose the LPR floating interest rate, the mortgage interest rate will switch every year. If we take January 1 as the time point, then the first batch of mortgage interest rate conversions is coming.

How much can mortgage interest rates be reduced this time?

Since 2020, the central bank has carried out two rounds of LPR interest rate cuts in one ***:

1-year LRP interest rate: reduced from 4.15% to 3.85%, a cumulative interest rate reduction of 30 basis points;

5-year LPR interest rate: reduced from 4.8% to 4.65%, a cumulative interest rate reduction of 15 basis points.

Home loans are almost all medium and long-term loans, based on the 5-year LPR interest rate. As long as you choose a floating interest rate,

The mortgage interest rate in 2021 will be 15 basis points lower than in 2020. This means that since 2015, existing mortgage loans will receive an "interest rate cut" for the first time, and the floating of mortgage interest rates has officially begun.

You must know that since 2015, the benchmark interest rate of policy loans has been maintained at 4.9%. Although the floating rate always changes, because the benchmark interest rate has not moved, past mortgage loans have not been able to be adjusted. This time it is reduced by 15 basis points, equivalent to 0.15%. Calculated based on a 30-year mortgage loan of 1 million, the cumulative savings in 2021 will be 1,080 yuan.

Although this number seems better than nothing, the LPR floating interest rate converts every year. If the central bank continues to cut interest rates in the future, the repayment amount will continue to decrease, and vice versa.

There are two points worth noting behind this:

First, it does not involve provident fund loans. This time the LPR interest rate reform only involves commercial loans, and provident fund loans remain unchanged.

Second, fixed interest rates are not affected either.

Under a fixed interest rate, the mortgage will remain unchanged throughout the loan repayment cycle. This way, it will not be affected by the economic cycle and interest rate increases and decreases. You will neither be able to enjoy the benefits of interest rate cuts nor accept interest rate increases. new costs brought about.

02 In the future, will the trend be to cut interest rates or to raise interest rates?

In the medium to long term, downward interest rates will be the general trend.

Interest rates are ultimately subject to economic growth and the monetary environment. Since 2008, my country's interest rates have been in a downward trend, from the initial level of more than 7% to 4.6%. This trend will be maintained in the future. .

In the short term, interest rates may either increase or decrease, depending on the economic situation.

If the economy soars and inflation is high, the need to raise interest rates becomes extremely urgent; if the economic growth is sluggish and inflation is low, the necessity of cutting interest rates to stimulate the economy becomes prominent.

At present, facing the biggest impact of the epidemic in history, China's economy can still achieve positive growth throughout the year, which is an extremely rare achievement. This achievement means that China's monetary policy will return to normal, the policy of stimulating the model through interest rate cuts will gradually be phased out, and credit tightening is likely to become the mainstream of policy in 2021.

Of course, there are still uncertainties in the epidemic situation. A new round of international epidemics has broken out again, and the global economy has suffered continued impacts. The national level stated that there is no need to make a sudden change in policy.

Short-term interest rate hikes are not a necessary policy option, while interest rate cuts are also not necessary. Similarly, based on the need for real estate market regulation, real interest rates and real estate market interest rates may be treated differently, and there may be the possibility of real interest rate cuts and real estate market interest rate increases. However, such interest rate increases are determined by time and will not Long term maintenance. Therefore, we see that starting from April 2020, the LPR interest rate has remained unchanged for eight consecutive months, which is a reflection of the policy's determination.

03 Due to the disparity in credit resources in different cities, mortgage interest rates also vary widely.

Currently, my country’s benchmark mortgage interest rate is 4.65%. However, due to the existence of additional points, almost all cities are higher than this ratio.

These are the 10 cities with the highest mortgage interest rates:

These are the 10 cities with the lowest mortgage interest rates:

As can be seen, the cities with the highest mortgage interest rates are In Chengdu, the first home loan interest rate is as high as 6.13%, 148 basis points higher than the benchmark; the lowest is in Shanghai, where the first home loan interest rate is only 4.65%, which is the same as the benchmark.

Generally speaking, mortgage interest rates in big cities are relatively low, while mortgage interest rates in small and medium-sized cities are relatively high. Third- and fourth-tier cities are generally higher than first- and second-tier cities.

The reason for this is that large cities have more abundant financial institutions, more adequate allocation of credit resources, and relatively small real estate market risks, while small city real estate markets require risk compensation.

In any case, starting from 2021, China’s mortgage interest rates will fully enter the LPR mode. The original policy loan benchmark interest rates will lose their guiding value, and mortgage interest rates will enter an era of more frequent changes