The People's Bank of China authorized the National Interbank Funding Center to announce that the quoted interest rate (LPR) of the loan market on August 20, 2020 was: 1 year LPR of 3.85%, and LPR of 5 years or more was 4.65%. This is the fifth consecutive month that LPR has maintained this level since April this year.
Why has LPR been "inactive" recently?
1, Wen Bin, chief researcher of China Minsheng Bank, told Zhongxin.com that with the remarkable effect of epidemic prevention and control and the stabilization and recovery of macro-economy, monetary policy has returned to normal, shifting from the previous loose aggregate to the current focus on structural optimization.
2. "On the one hand, more enterprises have stepped out of the predicament and gradually started to operate normally, and monetary policy needs to provide more accurate support; On the other hand, continuous total easing is also likely to cause idling arbitrage of funds, causing risks such as overheating of the local real estate market. " Wen Bin said that from the recent monetary policy operation, we can also appreciate the central bank's cautious attitude towards the loose operation of monetary policy. This month, reverse repurchase and MLF operations, the relevant interest rates remain unchanged, which conveys the signal that LPR will not fall this month.
Huang, vice president of Peking University National Development Research Institute, thinks that there has been no adjustment in recent months. On the one hand, it reflects the central bank's concept of maintaining normal monetary policy. On the other hand, the economy picked up in the second quarter, and there was little room for extremely loose monetary policy.
Although LPR hasn't changed in recent months, this strange and professional word has been familiar to most mortgage owners recently, because they are faced with the choice of fixed and LPR interest rates. Indecisive and hesitant mortgage owners have recently become nervous because of a notice from the bank. The five major banks recently announced that starting from August 25th, eligible individual housing loans that have not been converted into the pricing benchmark will be converted in batches and uniformly adjusted to the loan market quotation (LPR) pricing.
5. After choosing a fixed interest rate, your mortgage interest rate will remain unchanged at the current interest rate level and will not be affected by changes in LPR. If you choose LPR, your future mortgage interest rate will change with the change of LPR, which will affect the monthly payment. When LPR decreases, the repayment amount will decrease, but if LPR increases, the repayment amount will also increase. The central bank previously explained that the two conversion methods have their own advantages, and the specific choice depends on their own judgment, especially the judgment of the future interest rate trend. If we think that LPR will decline in the future, it will be better to refer to LPR pricing instead; If you think LPR may rise in the future, it will be beneficial to switch to a fixed interest rate.