Recently, ICBC, CCB and other banks have lowered the mortgage rate for first-home buyers in Guangzhou from 3.4% to 3.2%, while the second-home buyer rate remains unchanged at 3.8%. Some foreign banks have already lowered their first-home buyer rates in Guangzhou to 3.0%-3.1%, the lowest record ever. Mortgage rates continue to fall. Recently, the first-home buyer rates of many state-owned banks in Guangzhou have been further lowered from 3.4% to 3.2%. In the past two months, after the "5.17 New Policy", Guangzhou has responded very quickly and adjusted its housing credit policy on May 28, including a minimum down payment of 15% for the first home buyer and a minimum down payment of 25% for the second home buyer. "Not long ago, the first-home buyer rate of many banks dropped from 3.85% to 3.4%. Now Guangzhou continues to lower it, but this time it has not changed the interest rate for the second home buyer." said a person from a branch of a state-owned bank in Guangzhou. Not only that, foreign banks in Guangzhou are also relatively "competent". The interest rates for first-home mortgages of some foreign banks have dropped to 3%-3.1%. "However, foreign banks have higher requirements for the qualifications of customers and the loan amount is also larger." said a local banking industry insider. On July 15, the National Bureau of Statistics announced the changes in the sales prices of commercial housing in 70 large and medium-sized cities in June 2024. Data showed that in terms of first-hand housing, Beijing, Guangzhou and Shenzhen fell by 0.6%, 1.2% and 0.7% respectively, and Shanghai rose by 0.4%; in terms of second-hand housing sales prices, Beijing and Shanghai turned to rise for the first time since 2024, rising by 0.2% and 0.5% respectively, while Guangzhou and Shenzhen fell by 1.5% and 1.0% respectively. "Compared with other cities such as Beijing, Shanghai and Shenzhen, Guangzhou has cancelled the interest rate floor and has a higher degree of freedom in terms of authority." Yan Yuejin, research director of E-House Research Institute, said that in addition, market pressure in Guangzhou still exists, and the work of destocking needs to continue to increase, and real estate policies are more relaxed. At present, the interest rate for the first set of houses in first-tier cities including Beijing, Shanghai, and Shenzhen is 3.5%, and the average interest rate in many other cities is also around 3.4%. "Banks are reducing the cost of liabilities, which is mainly based on the consideration of asset investment. It is expected that more cities will follow Guangzhou's pace and continue to reduce the interest rate for the first set of houses." Many analysts said.   The interest rate for the first set of houses of foreign banks in Guangzhou has dropped to 3% Recently, many banks such as Industrial and Commercial Bank of China and China Construction Bank have lowered the mortgage rate for the first set of houses in Guangzhou from 3.4% to 3.2%, while the interest rate for the second set of houses remains unchanged at 3.8%. Some other foreign banks have reduced the interest rate for the first set of houses in Guangzhou to 3.0%-3.1%, which is the lowest record in history. "However, the customer group that enjoys this interest rate is relatively small, and the loan amount is also more than 3 million yuan or even 6 million yuan." A banking industry insider said. For most people, if they take out a loan of 3 million yuan in equal installments of principal and interest for 30 years, the total interest will be 1.7896 million yuan at a mortgage rate of 3.4%; while if they take out a mortgage rate of 3.2%, the interest will be 1.6706 million yuan, which is equivalent to saving nearly 120,000 yuan in interest. Compared with other first-tier cities, Guangzhou's mortgage interest rate policy is more positive. After the "5.17 New Policy", Guangzhou took the lead in canceling the lower limit of mortgage interest rates. On May 28, the General Office of the Guangzhou Municipal People's Government issued the "Notice on Further Promoting the Stable and Healthy Development of the Real Estate Market in Our City" (hereinafter referred to as the "Notice"). Non-local resident families and singles who can provide proof of continuous payment of personal income tax or social insurance payment in the city for 6 months before the date of purchase can enjoy the housing purchase treatment of registered residents, and are limited to purchasing 2 and 1 houses (120 square meters or less) in the restricted purchase area respectively. For households that purchase their first commercial housing with loans, the minimum down payment ratio for commercial personal housing loans is adjusted to no less than 15%, and the interest rate floor is cancelled. For households that purchase their second commercial housing with loans, the minimum down payment ratio for commercial personal housing loans is adjusted to no less than 25%, and the interest rate floor is cancelled. "The above-mentioned "Notice" stated. On the same day (May 28), major banks in Guangzhou reached a consensus on mortgage interest rates: the interest rate for the first house in Guangzhou is 3.4%, and the interest rate for the second house is 3.8%. Previously, the mortgage interest rate implementation policy of most banks in Guangzhou was: the down payment ratio for the first house should not be less than 30%, and the interest rate should not be less than LPR (loan market quotation rate) -10BP (basis points), that is, 3.85%; the down payment ratio for the second house should not be less than 40%, and the interest rate should not be less than +30BP (4.25%). Judging from the changes in the sales prices of commercial housing in 70 large and medium-sized cities in June announced by the National Bureau of Statistics recently, the data in Guangzhou is not optimistic. In terms of first-hand housing, the sales prices in first-tier cities fell by 0.5% month-on-month, and the decline narrowed by 0.2 percentage points from the previous month. Among them, Beijing, Guangzhou and Shenzhen fell by 0.6%, 1.2% and 0.7% respectively, while Shanghai rose by 0.4%. The sales price of newly built commercial housing in second-tier cities fell by 0.7% month-on-month, the same as last month. The sales price of newly built commercial housing in third-tier cities fell by 0.6% month-on-month, 0.2 percentage points narrower than last month. Data from the National Bureau of Statistics also showed that the sales price of second-hand housing in first-tier cities fell by 0.4% month-on-month, 0.8 percentage points narrower than last month. Among them, Beijing and Shanghai turned to increase for the first time this year, up 0.2% and 0.5% respectively; however, Guangzhou and Shenzhen fell by 1.5% and 1.0% respectively. The sales price of second-hand housing in second-tier cities fell by 0.9% month-on-month, 0.1 percentage points narrower than last month. The sales price of second-hand housing in third-tier cities fell by 0.9% month-on-month, the same as last month.   Many cities are expected to continue to lower interest rates At present, the implementation standards of mortgage interest rates in different cities in China are different. The first-home mortgage interest rate in first-tier cities including Beijing, Shanghai, and Shenzhen implements the LPR-45BP policy, which is around 3.5%. Huatai Securities data shows that in June 2024, the average interest rates of the first and second home mortgages in 100 cities fell by 5BP and 8BP month-on-month from May to 3.40% and 3.82%, respectively, both of which are the lowest levels since 2014. The loan cycle in 100 cities is 28 days, which is 6 days slower than in May, but still at a relatively fast level since 2019. However, from the demand side, it will take some time for residents' confidence to recover. Recently, the "Report on Residents' Home Purchase Intention in June 2024" released by China Index Research shows that the proportion of residents who have purchased homes within half a year in June 2024 is about 15%, which is still at a low level in the past year. The resistance to buying a house is still obvious: falling house prices, unstable income, and heavy loan repayment pressure are the main factors affecting residents' home purchases, accounting for more than 35%. "Among them, the continued decline in house prices has become the main resistance to buying a house. "China Index Research said that concerns about falling housing prices increased rapidly from May to June, especially during the policy window period. Real estate companies increased their efforts to reduce prices to recover funds and increased discounts. The decline in housing prices in 70 cities hit a new high, which led to increased concerns among residents about falling housing prices. In June, the proportion was about 43%, ranking first among resistance factors, up 5.3 percentage points from April. "Whether it is to reduce the interest rate of provident fund loans or to cancel the lower limit of mortgage interest rates, these policies are conducive to reducing the pressure on residents, especially those with rigid demand, and will hedge against the downward trend of housing prices to a certain extent." said a banking industry insider. In Yan Yuejin's view, the reduction in the interest rate of first-home mortgage loans in Guangzhou will continue to drive the reduction in other cities. This is a trend. For banks, there will be pressure on interest rate spreads, but they are also adjusting themselves, including reducing deposit rates, to cope with the narrowing of interest rate spreads. Data monitored by Rong360 Digital Technology Research Institute show that in June 2024, the average interest rate of three-month bank deposits fell to 1.565%, the average interest rate of six-month deposits was 1.77%, the average interest rate of one-year deposits was 1.9%, the average interest rate of two-year deposits was 2.107%, the average interest rate of three-year deposits was 2.507%, and the average interest rate of five-year deposits was 2.433%. "The three major risks to China's economy are currently small and medium-sized financial institutions, local debts, and real estate. Among them, real estate is the core of solving the problem, and more measures to stabilize real estate are not ruled out in the future." A market insider said. "By canceling purchase restrictions, lowering mortgage rates, adopting preferential loan rates for first-time home buyers, and helping developers resolve sedimentation assets such as commercial and residential buildings and parking spaces, the cash flow of real estate companies can be improved; by injecting government credit, the "run" of banks and other financial systems on real estate companies can be blocked, helping real estate companies to restore normal financing channels." On July 15, Zhang Bin, a senior researcher at the China Finance 40 Forum, suggested.