Recently,a professional concept in the financial field-Loan Market Price Rate(LPR)has become a hot topic among the public.
　　From August 25,large commercial banks such as Industrial and Commercial Bank of China,China Construction Bank,and Agricultural Bank of China began to uniformly adjust the pricing of personal housing loans within the scope of bulk conversion to LPR in accordance with relevant rules.Other banks have also issued similar conversion notices.This means that in the future,personal housing loan interest will be mainly determined by the level of LPR.
　　How is LPR produced?What impact will it have on the people?Let us approach LPR together.
　　How did LPR come from?
　　To make an analogy,18 quotation houses are like 18"judges",each of whom gives a score,removes the highest and lowest scores,and then calculates the final score,LPR
　　In the early morning of August 20,Cao Ke,a pricing manager of the Financial Management Department of the Bank of Communications,hurried to the office on the 10th floor of the Bank of Communications Building,Lujiazui,Shanghai.On this day,the People's Bank of China will authorize the National Interbank Funding Center to issue a new phase of LPR.
　　Since the central bank improved the LPR formation mechanism in August last year,the day when the LPR is announced every month has been the day that Cao Ke is most concerned about.
　　At 9:30,the new LPR was released,with a 1-year term of 3.85%and a 5-year term of 4.65%,both of which were the same as last month.Cao Ke breathed a sigh of relief."As we expected,it will remain unchanged."Cao Ke told reporters that once the LPR changes,he must immediately submit a parameter maintenance application to the head office operations department.After the new parameters take effect,the business staff of the whole bank will follow the latest LPR To handle business."This is related to the bank's credit placement arrangements,deposit and loan pricing strategies,and more importantly,the people's pockets.It can't be careless."Cao Ke said.
　　So,what exactly is LPR?What determines its value?
　　LPR is the abbreviation of Loan Prime Rate in English,and the Chinese name is"loan market quote interest rate".This interest rate is the loan interest rate that the bank implements to its highest quality customers.There is a specific formation mechanism for determining the reference interest rate recognized in this market.
　　"LPR was first created in October 2013,and LPR was not known to everyone for a long time."said Zeng Gang,deputy director of the National Finance and Development Laboratory of the Chinese Academy of Social Sciences.
　　LPR has really entered the public's field of vision,which has a lot to do with the"dual interest rate".With the continuous advancement of my country's interest rate market reform,the upper and lower limits of loan interest rates have been liberalized,but the benchmark lending rate is still retained.There is a"dual interest rate"phenomenon in which benchmark lending rates and market interest rates coexist.
　　"The problem with the'dual interest rate'is that the benchmark lending rate cannot reflect the changes in market interest rates in a timely manner,and banks tend to refer to the benchmark lending rate when determining loan interest rates,which leads to a gap between the actual perception of enterprises and the market interest rate,and the decline of market interest rates.It cannot be effectively transmitted to market entities."Zeng Gang said.
　　To resolve various problems brought about by the"dual-track interest rate",it is urgently required to increase the degree of marketization of LPR,give full play to the guiding role of LPR on loan interest rates,and promote the"two-track integration"of loan interest rates.
　　In August last year,the People's Bank of China decided to reform and improve the LPR formation mechanism.For the new LPR,each quoting bank shall submit quotations to the National Interbank Funding Center before 9 o'clock on the 20th of each month(postponed on holidays).The National Interbank Funding Center will arithmetic average to 0.05%after removing the highest and lowest quotations.The integer multiple of is rounded to the nearest integer to calculate LPR.
　　"For example,it is like scoring a contestant.The quotation line is the judge.Each person gives a score,removes the highest and lowest points,and then calculates the final score of the contestant."Zeng Gang said.
　　The new LPR has significant advantages.For example,the representativeness of quotation banks has increased.On the basis of the original 10 national banks,two urban commercial banks,rural commercial banks,foreign banks,and private banks have been added to 18.The newly added"jury members"are all banks of the same type that have greater influence in the loan market,stronger loan pricing capabilities,and better services to small and micro enterprises,which can effectively enhance the representativeness of LPR.
　　After the reform,the central bank put forward a clear requirement that all banks mainly refer to LPR pricing in newly issued loans,and use LPR as the pricing benchmark in floating rate loan contracts.Among them,LPR with a maturity of more than 5 years mainly provides a reference for the interest rate pricing of long-term loans such as mortgage loans issued by banks.
　　How does LPR affect mortgages?
　　After conversion,if the LPR goes down,the mortgage interest will decrease,if the LPR goes up,the mortgage interest will increase
　　After the operation of the new LPR formation mechanism,ordinary people feel the most about the changes in housing loans.
　　According to the announcement of the central bank,with October 8,2019 as the time node,the newly issued commercial personal housing loan interest rate will be formed based on the LPR of the corresponding period in the most recent month.For housing loans that have been issued before,according to the results of negotiations between financial institutions and customers,from March 1 to August 31 this year,the pricing benchmark will be converted to LPR plus and minus points.
　　what does this mean?Previously,most personal housing loans were linked to the benchmark interest rate of loans,and commercial banks would give a discount or increase in accordance with the requirements of housing credit policies and considering the risk status of the lender.For example,the benchmark interest rate is 4.9%.After a 10%discount,the actual implemented interest rate is 4.41%.After a 10%increase,the actual implemented interest rate is 5.39%.After the conversion,LPR replaced the"benchmark lending rate",and plus or minus points replaced the"discount or float".Customers with a 10%discount still apply 4.41%,but the calculation method is changed to LPR minus a certain basis point.In other words,after converting to LPR as the pricing benchmark,the customer's original mortgage"discounts or floats"will not change.
　　But what makes ordinary people quite entangled is that the benchmark loan interest rate is basically fixed at present,while LPR is quoted once a month.No conversion means that the mortgage interest payment can be fixed.After conversion,the mortgage interest rate must be adjusted according to the latest LPR on the annual repricing day.If the LPR goes down,the mortgage interest will decrease,and if the LPR goes up,the mortgage interest will increase..
　　Since the reform and improvement of the LPR formation mechanism,LPR has dropped many times."The market interest rate is currently in a downward cycle.Estimated based on the loan amount of 1 million yuan,if converted to LPR pricing,every 10 basis points decrease in LPR can save about 1,000 yuan in interest expenses each year."Chen Jun,general manager of the Bank of Communications Finance Management Department Said that if customers believe that LPR will rise significantly in the future,they can also choose a fixed interest rate.
　　So,there are two different choices in practice:
　　Some people think that market-oriented LPR has more advantages,and they can immediately enjoy the benefits brought about by lower interest rates——
　　“I received the ICBC’s conversion notice in March,but I was worried that LPR might go up and increase interest rates,so I kept watching.It wasn’t until the LPR dropped in April that I made up my mind to convert.”Wang Mengying,who works in a public institution in Beijing Said that in April this year,the account manager called and said that the newly announced LPR over 5 years was 4.65%,a cumulative decrease of 15 basis points from December last year.This means that the mortgage interest rate can drop from 5.37%to 5.22%."As soon as I heard this,I immediately agreed to the conversion,which can save a lot of interest expenses."Wang Mengying said.
　　Some people think that fixed interest rates are more practical and avoid the uncertainty of interest rate fluctuations——
　　"I choose a fixed interest rate,which saves worry."Liu Qingshan,a senior manager of a manufacturing company in Qingdao,Shandong,said that his mortgage was made in a bank 20 years ago.At present,the principal of the loan is 80,000 yuan.There are 5 years remaining."Although the LPR is lowered at the moment,it may also rise in the future.I will eventually determine the pricing method of the mortgage as a fixed interest rate."
　　“For customers’questions,we will patiently explain them.After repeated communication,customers can basically understand the LPR policy and make choices that suit them.”said Jia Junchao,product manager of the personal credit department of China CITIC Bank Beijing Branch.In the end,most customers still The more flexible LPR was chosen as the pricing benchmark.
　　Central Bank data shows that by the end of August,the conversion of stock loan pricing benchmarks had been successfully completed.Among the converted stock loans,94%of personal mortgages chose to refer to LPR pricing.
　　What does LPR bring?
　　LPR has become the"transmitter"of monetary policy,the"weathervane"of interest rate trends,and the"frame of reference"for macro-control
　　In fact,the reformed LPR affects not only personal mortgages.As an important step in the reform of interest rate marketization,LPR will promote the healthy development of my country's financial market in a broader and deeper level.
　　——Become the"conductor"of monetary policy.
　　In recent years,my country’s monetary policy has continued to exert force to provide financial support for the real economy.Some companies report that the market interest rate has dropped significantly,but they don’t feel adequately when borrowing.Why?One of the important reasons is that before the LPR reform,most banks still refer to the benchmark loan interest rate when issuing loans.In particular,individual banks set an implicit lower limit at a certain multiple(such as 0.9 times)of the benchmark loan interest rate,which hindered the market interest rate from offering to entities.Economic transmission.
　　"After the reform,the degree of marketization of LPR has increased significantly,which is of great significance for improving the efficiency of monetary policy transmission,reducing corporate financing costs,and increasing support for the real economy."said Tang Jianwei,chief researcher of the Bank of Communications Financial Research Center.
　　Data shows that in the first seven months of this year,the financial sector has reduced the burden of market entities by 870 billion yuan.Among them,the decline in LPR led to a decline in loan interest rates,which reduced the burden on enterprises by 354 billion yuan.In July of this year,corporate loan interest rates fell by 0.64 percentage points year-on-year,which was significantly higher than the one-year LPR drop in the same period,reflecting the effect of reforming the interest rate transmission mechanism.
　　——Become the"vane"of interest rate trends.
　　Regarding interest rates,a word that people often come across in the past is"interest rate cut".In the past,the"interest rate cut"was mainly completed by the decline in the benchmark deposit and loan interest rate.Now the"interest rate cut"is mainly reflected in the LPR quotation,which can better reflect the decline in market interest rates.So far,the 1-year LPR has been reduced by 0.4 percentage points from the first period,and the cumulative LPR over 5-year period has been reduced by 0.2 percentage points.
　　"The reformed LPR has a higher degree of marketization,more flexibility,and can more sensitively reflect changes in the supply and demand of funds in the market.It has become the bank's main reference for loan pricing."Tang Jianwei said.
　　At the same time,LPR also affects deposit interest rates and plays an important role in promoting the marketization of deposit interest rates.
　　"Since the beginning of this year,many people have felt that bank deposit interest rates have fallen.In fact,this is also related to LPR."said Wang Yifeng,chief banking analyst at Everbright Securities.After the LPR reform,loan interest rates have dropped significantly.In order to match asset returns,Banks will appropriately reduce the cost of liabilities to guide deposit interest rates down.
　　-to become the"frame of reference"for macro-control.
　　Interest rate is the price of funds.Interest rate adjustment,which is what we commonly call"interest rate cut"and"rate increase",is an important means for the central bank to conduct macro-control through monetary policy.
　　"After the LPR reform,the benchmark lending rate gradually fades out of the historical stage,and LPR will become an important reference for macro-control."Tang Jianwei said that LPR can reflect the situation of capital supply and demand,provide an important reference for the financial sector to implement macro-control,and help ensure a sound monetary policy.Be more flexible and appropriate to better meet the needs of real economy development.
　　Liu Guoqiang,deputy governor of the People’s Bank of China,stated that the People’s Bank of China will continue to deepen the LPR reform,promote the realization of the“two-track integration”of interest rates,further optimize the LPR transmission mechanism,focus on improving the central bank’s policy interest rate system,and promote market interest rates to revolve around the central central bank’s policy Interest rate fluctuations.