Text/Leju Finance Liu Zhiying

The interest rates on mortgages in first-tier cities have shown a "misalignment".

With the new round of LPR cuts, mortgage interest rates in various regions have also been adjusted. At present, except for Beijing, Shanghai, and Shenzhen, where mortgage interest rates are still in the "3-digit range", mortgage interest rates in most cities have dropped to the "2-digit range".

Specifically, in first-tier cities, the commercial loan interest rates for first-home purchases in Beijing, Shanghai, and Shenzhen have been reduced to 3.15%, and the interest rates for second-home purchases have been reduced to 3.35% or 3.55%. In Guangzhou, where the lower limit of mortgage interest rates has been abolished, mortgage interest rates have hit a record low of 2.6%, creating a "space" where commercial loan interest rates are lower than provident fund interest rates.

In other second- and third-tier cities, the mortgage interest rates for first- and second-home purchases in Fuzhou are 2.95%; the mortgage interest rate for first-home purchases in Foshan is 2.95%, with a minimum rate of 2.9% available; and the mortgage interest rates for first-home purchases in Changsha, Wuhan, and Hangzhou have also dropped to around 2.95%.

Currently, the interest rates for individual housing provident fund loans for first-home purchases with a term of less than 5 years (including 5 years) and over 5 years are 2.35% and 2.85%, respectively, in various cities.

Zeng Gang, Chief Expert and Director of the Shanghai Finance and Development Laboratory, said that housing provident fund loans carry a meaning of policy support and are generally lower than commercial bank mortgage interest rates. Historically, we have never seen commercial loan interest rates lower than those of housing provident fund loans. The occurrence of this situation means that the adjustment space for housing provident fund loan interest rates should also be opened up.

Yan Jueyin analyzed that from the perspective of inversion, the current mortgage interest rates for first-home purchases in some cities are 2.85%, with a minimum rate of 2.6% achievable. The current interest rate for housing provident fund loans is 2.85%. If such policies are implemented in the future, the "cost-effectiveness" of housing provident fund loans will be minimal, and commercial loans will be more cost-effective than housing provident fund loans.

Yan Jueyin believes that there is still potential for further reductions in housing provident fund loan interest rates, especially given the current disparity.

Li Yujia, Chief Researcher at the Guangdong Housing Policy Research Center, said that when the low-interest rate advantage of housing provident fund loans is no longer obvious, moderately reducing the interest rate of housing provident fund loans and widening the interest rate spread between the two may be one of the means to maintain the attractiveness of housing provident fund loans. "The purpose of launching housing provident fund loans is not to make money, but to benefit home buyers. To continue to leverage its guarantee advantages, it should move with the market and highlight its inclusiveness. At the same time, the management model of the housing provident fund business should be further optimized, and the scope of housing provident fund contributions should be actively expanded in the future to benefit more home buyers and renters."

"With the successive introduction of a basket of incremental policies, macro policies are fully focused on stabilizing growth, and the decline in LPR quotes is in line with the general direction of current macro policies," noted Ming Ming, Chief Economist at CITIC Securities. Focusing on stabilizing the real estate market and boosting economic growth momentum, there may still be room for further reductions in LPR quotes in the future. Mortgage interest rates across regions may decrease further, with specific levels depending on the magnitude of LPR adjustments and the implementation of local policies.