In order to earnestly implement the principle that “houses are for living in, not for speculation”, as well as the long-term management mechanism for real estate market, and to ensure the effective implementation of regionally differentiated housing credit policies, keep interest rates of individual housing loans basically stable, and safeguard the legitimate rights and interests of both borrowers and lenders when reforming and improving the loan prime rate (LPR) formation mechanism, the People’s Bank of China (PBC) decides to make the following announcement regarding new commercial individual housing loan interest rates:
1. Starting from October 8, 2019, new commercial individual housing loans should be priced by adding basis points to the latest monthly LPR of corresponding maturity. The basis points added should conform to the national and local housing credit policy requirements, reflect the loan risk profile, and remain fixed during the contract period.
2. When applying for commercial individual housing loans, borrowers may agree on the interest rate repricing period with banking financial institutions based on negotiation. The repricing period should at least be one year. On the interest rate repricing day, the pricing benchmark should be adjusted and adopt the latest monthly LPR of corresponding maturity. The interest rate repricing period and adjustment method should be specified in the loan contract.
3. The interest rate of first-time commercial individual housing loans should not be lower than the LPR of corresponding maturity, and the interest rate of second-time commercial individual housing loans not be lower than the LPR of corresponding maturity plus 60 basis points.
4. The provincial PBC branches should guide the provincial-level self-regulatory mechanisms for pricing market interest rates in line with the basic principle of “introducing city-specific policies” to set the lower limits of additional basis points for first- and second-time commercial individual housing loan interest rates in respective jurisdictions based on national credit policies and changes of local real estate market situations.
5. The banking financial institutions should specify the pricing rule of commercial individual housing loan interest rates and reasonably determine the additional basis points for each loan, based on the lower limits set by the provincial-level self-regulatory mechanisms for pricing market interest rates and the factors including the operation of the institution, client's risk profile and credit conditions.
6. The banking financial institutions should make earnest efforts to publicize and interpret policies, provide policy consultation services, and protect borrowers’ contractual rights and consumers’ rights and interests in accordance with laws and regulations. Mortgage transfers or additional mortgages for individual housing loans are strictly prohibited, so as to ensure the orderly and steady advancement of relevant work.
7. Commercial individual housing loans with contracts signed prior to October 8, 2019, whether issued or not, should be executed in accordance with the original contracts.
8. Business housing loan interest rates should not be lower than the LPRs of corresponding maturities plus 60 basis points. Temporarily no adjustments shall be made to the interest rates of individual housing accumulation fund loans.
