New interest rates for mortgages: Considerations for early repayment

by bjjdwxgs on 2009-12-03 09:45:03

Lead: Starting from January 1st, 2008, that is from today, major banks will implement new interest rate standards. For those with home loans, this means facing the question of whether or not to prepay their loans and how to repay them. For this reason, reporters conducted a survey.

Voice-over: Mr. Li works at a large state-owned enterprise in the urban area. He took out a loan last year to buy a commercial property. According to the initial repayment agreement, the loan repayment pressure on Mr. Li's family was relatively light. However, the bank's multiple interest rate hikes this year have made him worried.

Synchronized sound: Citizen Mr. Li - For those who take out large housing loans, it can be quite a burden because the interest rates have been increased several times consecutively. I also took out a relatively large loan, amounting to 300,000 yuan.

If the new mortgage interest rate standard is applied for monthly repayments, Mr. Li has already clearly felt the strain!

Synchronized sound: Citizen Mr. Li - After the house loan interest rate increase, I considered repaying part of it in advance. After this interest rate hike, there might be more in the future. So after careful consideration, I decided to repay part of the loan in advance.

In fact, many citizens are as worried as Mr. Li. In recent days, reporters have seen a large number of people queuing up at various bank outlets in the urban area to prepay their mortgages.

Synchronized sound: Citizen - After the interest rate hikes in 2007, buying a house has become somewhat burdensome for us ordinary people. So I came early to handle the housing provident fund loan repayment business, hoping to reduce the pressure of buying a house.

It is understood that this latest adjustment of bank loan interest rates is the sixth consecutive interest rate hike by the central bank this year, and the cumulative effect of the interest rate hikes will be fully reflected starting from January 1st, 2008.

Synchronized sound: Business Advisor Wang Xiaoling, Yancheng Yingbin Branch of China Construction Bank - Since 2006, the central bank has raised the loan interest rate six times. Although this sixth time did not raise the loan interest rate for terms over five years, from the beginning of the year to now, the loan interest rate has risen from the original 6.84% to 7.83%.

Compared to the six consecutive interest rate hikes by commercial banks, the increase in the housing provident fund loan interest rate is relatively smaller.

Synchronized sound: Director Pan Yue, Housing Provident Fund Management Center - Taking a 20-year term as an example, the housing provident fund loan interest rate rose from 4.59% at the beginning of the year to 5.22%.

But whether buying a house with a housing provident fund loan or a commercial loan, both will face the issue of higher interest rates, which is a matter of concern for millions of people.

Synchronized sound: Citizens 1 & 2

1. Because a house is a necessity for us common people, even though the loan interest rate has increased, we still need to buy houses.

2. If within our capacity, we can buy a house; if not, we can wait and see, repair the fax machine.

This series of six consecutive interest rate hikes has obvious effects on the public. What impact will it have on the currently hot real estate market? Miss Le, the sales manager of a certain residential complex in the urban area, gave us some calculations.

Synchronized sound: Sales Manager Le Hongmei, A Certain Residential Complex in the Urban Area - The total price of a house is 400,000 yuan. Relatively speaking, the down payment would need to reach 120,000 yuan, with a loan of 280,000 yuan for a five-year term, requiring a monthly repayment of more than 5,000 yuan. For the average owner, this is difficult to accept. Therefore, relatively speaking, the term tends to be longer (over five years).

It is understood that this adjustment of the central bank's loan interest rate mainly targets periods within one to five years, while the interest rate for loans over five years has not been raised. Although monthly payments have increased, it does not mean every citizen must rush to repay their loans. Each family's financial situation should be analyzed specifically, and reasonable financial planning should be carried out.

Synchronized sound: Business Advisor Wang Xiaoling, Yancheng Yingbin Branch of China Construction Bank - First, for salaried workers, if the family does not have sufficient funds, it is not necessary to repay the loan in advance. One should follow the original financial planning and include it in the children's education fund planning and pension planning, implementing it step by step. It is not necessary to rush to repay the loan; for families with more comfortable finances and sufficient funds, if there is no better investment opportunity, they can repay the loan in advance.

Tonight's commentary: Financial Planning, Act Within Your Means

This series of six consecutive interest rate hikes by the bank and raising loan interest rates is a way for the country to use macro-control measures to guide rational investment among the public. Interest rate increases will certainly prompt some people to repay their loans in advance, but prepaying is not the only way to reduce interest rate risks. For those with strong bearing capacity and certain investment experience, they can obtain higher returns through related financial products, thereby reducing the burden of mortgage loans. As for ordinary mortgage holders, when the financial returns are lower than the loan interest rate, it is still recommended to repay the loan in advance. In short, act within your means.