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How does MLF rate cut 20 basis points affect your mortgage?

How does MLF “rate cut” 20 basis points affect your mortgage?
On April 15th, at the same time as the targeted RRR cut, it initially announced the launch of a medium-term loan facility (MLF) operation of US $ 100 billion and won the bid rate of 2.95%, down 20 basis points from the last time.This is a matter of “you can basically guess the end when you see the beginning”.Its “beginning” is a 20 basis point drop in reverse repurchase rates on March 30, and its “ending” will be LPR (loan market quoted interest rate) quotes on April 20.The market generally expects that the LPR quotations will be reduced synchronously with a high probability in April. Among them, LPR over 5 years is the vane of most mortgages, and “rate cuts have stabilized”, most people say.The 3-year MLF interest rate fell below 3% for the first time and the “rate cut” was in place on the same day.Allegedly announced on April 15 that starting from the same day, the transition to rural financial institutions and urban commercial banks operating only in provincial administrative regions will lower the deposit reserve ratio by one subdivision, implemented in two stages, with each reduction0.5 averages.Today, the first deposit reserve ratio adjustment for the implementation of the policy released about 200 billion US dollars of long-term funds.At the same time, the MLF operation was carried out in advance of 100 billion US dollars, and the bid rate was 2.95%, compared with the previous period score decreased by 20 basis points.The RRR cut was announced in early April, and it was no surprise that the “rate cut” came.On March 30, the open market operating rate (7-day reverse repo rate) was lowered by 20 basis points for a long period of time. It is currently widely expected that the 4-month MLF interest rate and LPR will be reduced simultaneously with a high probability.It is worth mentioning that this is the second time the MLF interest rate has been lowered since the annual economy entered the epidemic cycle this year. It is also the first time the MLF interest rate has fallen below 3% in the past three years.Talking about the necessity of lowering the MLF interest rate, a large number of people said that as the basic disk of China’s employment, the majority of SMEs are facing unprecedented challenges in this epidemic.In the future, the policy of reducing the burden on enterprises is the key, through “interest rate cuts” to unblock the monetary policy mechanism, reduce the actual financing costs, and guide financial institutions to increase their support for the real economy, especially small and micro enterprises, and the support of private enterprises is a key part of it., The urgency becomes more prominent.Next week, the mortgage interest rate will fall synchronously and at one end of the monetary policy restructuring chain, the actual interest rate that is related to the public is LPR.LPR is quoted on the 20th of each month, the latest one will be next week.Wen Bin, chief analyst of China Minsheng Bank, said that from the perspective of the LPR quotation mechanism and the law of volatility changes, it is expected that the 1-year LPR quotation on April 20 will be in line with the MLF interest rate reduction by 20 basis points, and the interest rate will be 4%.05% return 3.85%.Since most mortgages have a maturity of more than 5 years, LPR over 5 years is regarded as a vane for mortgage interest rates.”In order to maintain the stability and continuity of the real estate market adjustment policy, LPR may fall by 10 basis points to 4 over 5 years.65%.”Wen Bin said.Zhang Dawei, chief analyst of Centaline Real Estate, also expects that there will be a high probability that the price of LPR will decline in April. Among them, LPR over 5 years may be reduced by 10 to 20 basis points.According to Zhang Dawei’s calculation, with 1 million mortgages and equal principal and interest repayment for 30 years, for every 5 years of LPR decline by 10 basis points, the monthly supply will be reduced by about 60 yuan.If the LPR is over 5 years in April, it will be reduced by 10 basis points to 4.65%, monthly rejuvenation 5216.47 yuan reduced to 5156.37 yuan.Since the reform in August last year, LPR offers over 5 years have only been lowered by 2 times, and each drop has shifted by 5 basis points. This time the market generally expects the increase in the drop to increase, will it trigger a skyrocketing property market?”Personally I don’t think so.The era of investing in real estate speculations has passed. Because the overall demographic structure has changed, the purchasing needs of young people are shifting, and the number of vacant houses for the elderly is increasing; replacing housing and not speculating, preventing housing from expanding financial properties excessively and making housing squeeze the real economy.Therefore, the property market will not be changed by 20 basis points.”Pan He Lin, Executive Dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, said.He also reminded that although the property market will not skyrocket, sufficient liquidity, lower capital costs and currency easing expectations are always a good thing for “stabilizing house prices”, and real estate substitution policies still need to be alert to excessive house price rises.CPI drop supports further “rate cuts” The current new coronary pneumonia epidemic is still raging overseas. Due to the impact of the epidemic on the economy, since early March, at least 20 countries such as the United States, Canada, New Zealand, Sweden, the United Kingdom and Egypt have been announced to cut interest ratesThe country also makes asset purchases simultaneously.From the perspective of domestic factors that affect whether interest rates are cut, long-term has been a major constraint, but the 3-month CPI has fallen back to the “4 era.”Wen Bin said that the average CPI growth rate in March fell back quickly, and the downward turning point continued to appear, which was conducive to a more flexible and moderate monetary policy.In the next stage, monetary policy adjustment should be dominated by quantitative tools, and shifted to price-based tools. The main reason is to adopt and continue to lower policy interest rates, promote the overall downward shift of the national debt yield curve, drive corporate bond issuance interest rates down, and reduce direct corporate financing.Cost ;; timely and appropriate reduction of the benchmark deposit interest rate, unleashing the potential of LPR reform, and guiding the continued decline in loan interest rates.Effectively reduce the financing costs of the real economy from two channels, direct financing and indirect financing.Wang Qing, chief macro analyst of Dongfang Jincheng, believes that considering that the current policy interest rate, including the internal MLF interest rate, is still much higher than the zero interest rate level, the future CPI growth rate will trend downward, and the rate cut cycle will continue until the end of the year, AprilAfter that, the MLF interest rate still has room for a reduction of about 30 basis points.Sauna, Ye Wang Cheng Weimiao Editor Xu Chao Zhao Ze proofreading Li Shihui