April LPR (Loan Market Quote Rate) was announced as scheduled. On April 20, the central bank authorized the National Interbank Funding Center to announce that the LPR on April 20, 2022 is: 3.7% for 1-year LPR and 4.6% for 5-year or more LPR, both of which are consistent with the previous period. The above LPRs are valid until the next LPR is issued.
Failed as expected
Although the industry’s expectations for the LPR cut in April have increased, the market has long expected that the LPR rate cut will fail. “In fact, the LPR remains unchanged, which is basically the same as the market expectations after the announcement of the National Convention, but there is a certain gap with the previous one.” Wang Hao, a senior macro analyst, believes that there are three reasons for the central bank to keep the MLF interest rate and LPR unchanged in April: 1. After the previous two interest rate cuts, the current interest rate level is already low, and there is limited room for further adjustment. Second, the pace of tightening of the Fed’s monetary policy has accelerated. It is likely to start to shrink its balance sheet in May, and the interest rate spread between China and the United States’ long-term Treasury bonds has inverted. Continued interest rate cuts will increase the pressure of RMB depreciation and capital outflows. Third, for banking institutions, RRR cuts can better balance the dual goals of providing liquidity and reducing debt costs, and provide continuous financial support for “easy credit”.
From the perspective of the industry, from the current point of view, LPR remains stable and has a neutral impact on the market. “The main reason is that the unchanged interest rate quoted by LPR has not prevented banks from making reasonable profits to the real economy,” said Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank. Data show that since the beginning of the year, the interest rates of new corporate loans issued by banks have remained stable with some declines as a whole, continuing to be the lowest since the relevant statistics were refreshed. At the same time, market liquidity remained reasonably sufficient, and monetary policy was effective and effective in supporting the real economy. Overall, economic fundamentals and policies continue to remain friendly to the market.
In addition, the stable LPR quotation this time has also released the real estate regulation and control, and has not hindered the implementation of real estate financial policies in various cities. In Zhou Maohua’s view, from the perspective of local policies, all localities continue to focus on the “three stability” tasks of real estate, precise control, support rigid needs and reasonable financing needs of real estate enterprises, and accelerate the construction of long-term mechanisms for real estate, supply through multiple channels, and meet market diversification. housing demand.
Wang Hao also believes that the unchanged LPR has little impact on the interest rate of the money market, which is mainly reflected in the fact that the liquidity remains reasonably sufficient and the price of funds remains stable. For the bond market, the policy combination of a small RRR cut and keeping interest rates unchanged is limited, and the bond yields are likely to remain slightly fluctuating in the follow-up, which is still easy to rise and hard to fall; for the property market, mortgage interest rates are not currently available. The main influencing factors of the market, the impact of the epidemic and the overall lack of confidence of urban residents are the main reasons for the inactive real estate sales and transactions.
According to Wang Hao, after the impact of the epidemic declines, the supply and demand sides of real estate will improve, but the progress of recovery may be slow.
Short-term reduction of LPR is unlikely
Regarding the follow-up monetary policy and the real estate market, the symposium on financial support for the real economy jointly held by the central bank and the China Banking and Insurance Regulatory Commission on April 19 also released new signals.
It was pointed out at the meeting that financial institutions should focus on key support areas such as contact-type service industries, small and micro distressed entities, freight logistics, investment and consumption, strengthen financial services for key consumption, new citizens and effective investment, and allocate credit resources in a timely manner. , internal assessment, transfer pricing and other aspects to introduce supporting measures. It is necessary to give full play to the effectiveness of various structural monetary policy tools, do a good job in the connection between government, bank and enterprise, and release policy dividends as soon as possible. It is necessary to balance the relationship between supporting epidemic prevention and control, supporting the real economy and preventing risks, and improve the sustainability of policies and the effectiveness of publicity.
At the meeting, it was emphasized that financial institutions should adhere to the positioning of “houses are for living in, not for speculation”, and implement differentiated housing credit policies according to city-specific policies to better meet the reasonable housing needs of home buyers. It is necessary to implement the macro-prudential management system for real estate finance, distinguish project risks from enterprise group risks, and do not blindly withdraw, cut off or suppress loans, and maintain stable and orderly real estate financing. In accordance with the principles of marketization and the rule of law, financial services for mergers and acquisitions of key real estate enterprises’ risk disposal projects shall be done well. It is necessary to optimize credit policies in a timely manner, and flexibly adjust the personal housing loan repayment plans for those affected by the epidemic.
Looking at the follow-up monetary policy trend, Zhou Maohua pointed out that my country is currently facing a complex internal and external environment, the economy is still facing downward pressure, and a prudent monetary policy needs to maintain a certain degree of flexibility. Macro data show that due to the impact of the spread of the epidemic on the economy, and the impact has not yet ended, many domestic enterprises in the industry are still facing major operational difficulties, domestic prices are generally moderate and controllable, the financial system is operating steadily, and policy space and independence are maintained well. If the recovery of domestic demand is not satisfactory in the future, and the operating pressure of enterprises in some industries will continue to increase, it is not ruled out that the prudent monetary policy will continue to be fine-tuned. On the whole, the combination of total volume and structural tools will be adopted to provide precise support and focus on policy quality and efficiency.
Wang Hao believes that in the second quarter, the possibility of the central bank lowering the LPR has been significantly reduced. In the follow-up, monetary policy will mainly rely on aggregate tools from the first quarter or will mainly rely on structural tools. The current round of the epidemic has a wider scope and a deeper impact, and the pressure on the economy to “stabilize growth” has increased. After the national epidemic is basically under control, the structural monetary policy is expected to be further strengthened. Policies such as inclusive finance, support for agriculture and small businesses, and extension of loan principal and interest repayment may be launched one after another.
Zhang Dawei, chief analyst of Centaline Real Estate, said that from the perspective of domestic and foreign macro policies, LPR is unlikely to cut interest rates in the short term, which is relatively stable for the property market. He also pointed out that at present, the market is also looking forward to the emergence of more interest-giving policies from banks, especially how banks can reduce mortgage interest rates if the LPR does not drop.
Beijing Business Daily reporter Liu SihongReturn to Sohu, see more
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