**Interviewer:** Can you provide us with the latest updates on the adjustments to existing home loan interest rates in China?
**Spokesperson:** Absolutely. As of October 25, a substantial adjustment has been made to existing home loan interest rates, benefiting around 150 million people nationwide. Many regions across China, including Guangzhou, will see their interest rates reduced to LPR minus 30 basis points. The Vice Governor of the People’s Bank of China, Tao Ling, announced at a recent press conference that most borrowers can check their new rates through their banks starting October 26. Some smaller banks may require a bit more time to make these adjustments, but all changes are expected to be completed by October 31.
**Interviewer:** That’s interesting. Have banks made it easy for borrowers to track these changes?
**Spokesperson:** Yes, several banks have introduced a dedicated section in their mobile banking apps specifically for “existing home loan interest rate adjustments.” According to recent figures released on October 21, the five-year LPR is currently at 3.6%, which means that with the new adjustment, the rate will be approximately 3.3%. However, one local resident, Ms. Chen from Guangzhou, reported that her new interest rate is dropping from 4.2% to 3.9%, not the anticipated 3.3%. She also pointed out that her friend’s adjusted rate is 3.55%, and she is confused about why their rates differ.
**Interviewer:** What can you tell us about the reasons behind these discrepancies?
**Spokesperson:** The current adjustments are based solely on changing the LPR margins without resetting the loan pricing. Essentially, if a borrower’s loan reset date hasn’t arrived yet, the LPR will remain at the previously agreed level. For example, according to the Industrial and Commercial Bank of China, the five-year-plus LPR can differ based on individual loan reset dates. As a result, while all adjusted rates are calculated at LPR minus 30 basis points, the final rates will differ, with some borrowers seeing reductions to 3.55%, 3.65%, or 3.9%.
**Interviewer:** It sounds like the adjustments can vary quite a bit. Are there any specific steps borrowers should take?
**Spokesperson:** Yes, borrowers with fixed or benchmark-rate loans will need to apply to convert their loans to variable rates in order to take advantage of the new adjustments. Most borrowers can complete this process easily online or through their mobile banking apps without needing extensive documentation. However, for those with fixed-rate loans, they need to make the conversion first either online or in-person before adjustments can be applied. Banks have said that any conversions completed by October 25 will be fully processed by the next day under the new rate.
**Interviewer:** That’s helpful information. What advice would you give to borrowers considering early repayment of their loans?
**Spokesperson:** According to Xiao Wenxiao, Chief Analyst for the Guangzhou-Foshan region, the reduction in existing home loan rates diminishes the necessity for early repayments. Borrowers should carefully assess whether paying off their loans early is beneficial. If the returns on investments can exceed the loan costs, it may be better to hold off. Additionally, it’s crucial to note that early repayment is more advantageous in the early stages of the loan. Once borrowers have surpassed half of their repayment period with equal principal and interest, or one-third with diminishing principal, most of the interest has already been paid.
**Interviewer:** Thank you for your insights! This will certainly help borrowers navigate their options better.
