Repay the "fixed loan and floating" play combination with spare money in advance

A rate hike, another rate hike.

Despite the age-old discussion of raising interest rates, the news ahead of the May Day holiday caught many off guard. Buying a house is not easy. The rising housing prices have made many people unable to afford their mortgages, and the continuous increase in mortgage interest rates is even more worrying.

Unsurprisingly, the interest rate hike has accelerated fixed-rate loans. It is reported that China Everbright Bank Beijing Branch completed 10 fixed-rate mortgages within two days. Since April 28, although there are only a few working days, the number of inquiries received by the bank has increased exponentially, and the public's interest in fixed-rate loans has suddenly increased.

Expectations of interest rate hikes are gradually becoming clear

One of the major backgrounds for borrowers switching to fixed-rate loans is that China's current interest rate level is at a low point in the past 20 years. When to enter the interest rate hike cycle has always been one of the hot topics discussed in the industry. First, the increase of 0.27 percentage points in the interest rate of various grades of loans this time has led many people to conclude that the central bank is using this to show its tightening monetary policy, so that social and economic entities can consciously adjust their behavior, which means that China has officially entered the interest rate hike cycle.

Some scholars also said that it cannot simply be said that it has entered a cycle of raising interest rates. In mature market economy countries, due to the obvious cyclicality of the economy, their interest rate adjustment also reflects the cyclical characteristics. One stage is interest rate hike, the other stage is interest rate cut, and China's economy is transitioning from a planned economy to a market economy. It will not show obvious economic cyclicality like a mature market economy. Whether or not to raise interest rates in the future also depends on China's economic and financial situation. If loans still maintain the momentum of rapid growth, the central bank will have follow-up adjustment measures, and the situation of continuous interest rate hikes is likely to occur in the future.

Continuous interest rate hikes are increasingly burdensome on mortgages

After each interest rate hike, borrowers will always receive advice from the bank, 0.27% has little impact on mortgages, and the monthly repayment does not increase much , the public does not have to rush to repay the loan in advance. However, to summarise carefully, since October 2004, after housing loan interest rates have been adjusted three times, careful borrowers have found that the burden is now more than greatly increased.

Take the interest rate of housing loan over 5 years as an example, on October 29, 2004, the interest rate of housing loan over 5 years was adjusted from 5.04% to 5.31%. On March 17, 2005, in response to the overheating of housing loans, the central bank only raised the interest rate on housing loans for the second time, returning the housing loan preferential interest rate to 6.12% of the loan interest rate level of the same period, and implementing lower limit management, the interest rate of personal housing loans with a term of more than 5 years The lower limit is 5.51%. Recently, on April 28, the central bank once again announced to raise the benchmark lending rate of financial institutions, and the benchmark one-year lending rate was raised from the current 5.58% to 5.85%. The benchmark interest rate for mortgages over 5 years has also been raised to 6.39%.

So far, housing loans for more than 5 years have risen from the initial 5.04% to the current 6.39%. Take a 500,000, 30-year housing loan as an example, if the repayment method of equal principal and interest is adopted, before October 2004, the monthly repayment amount of the borrower was 2,696 yuan, but now, according to the benchmark of 6.39% Interest rate, the monthly repayment burden has increased to 3124 yuan, an increase of 428 yuan. In less than two years, the monthly repayment has increased by 428 yuan. Even if the preferential interest rate is 10% lower, there will be an increase of 222 yuan. The wage-earners who work hard just to pay off their mortgages can't help feeling cool.

Selecting the right mortgage to deal with the risk of rising interest rates

The key to effectively avoiding the risk of rising interest rates is to choose the right mortgage. Nowadays, the differences in the mortgage terms of various banks are becoming more and more obvious, which is worth our brains.

Trick 1: If you have spare money but no higher profit channels, it is better to repay in advance.

In the past, some people may have worried that after repayment in advance, it would be difficult to lend from the bank once there is a large demand for funds, but now, many commercial banks including Industrial and Commercial Bank of China and China Construction Bank have launched personal With the flexible loan policy of comprehensive credit extension, if the loan is within the line of credit, the loan can be easily and conveniently lent again, thus reducing the worries of early repayment.

It is worth reminding that many people, according to their inherent habits, believe that they can only repay in advance once a year, so they always wait until they have accumulated a large amount of money before focusing on repayment. Bank financial experts remind the public that the bank has no clear limit on the number of early repayments. As long as the normal repayment is more than 1 year, the early repayment amount has reached the minimum repayment amount stipulated by the bank. 6 times the monthly repayment amount) can ask the bank for early repayment at any time to reduce interest expenses.

Trick 2: Carefully study the time frame for mortgage adjustment.

In the mortgage terms of different banks, there are different regulations on interest rate adjustment. For example, Shanghai Gongshang, Agriculture, China and Construction take the "loan date" as the basis for interest rate adjustment. For customers who have already made loans, the new interest rate will be implemented from January 1 next year based on the principle of "yearly interest rate adjustment" stipulated in the contract. Previously, the interest was still calculated according to the original standard. For customers who have applied to the bank before, or even signed a contract but have not yet released the loan, the new mortgage interest rate will also be implemented because of the interest rate standard on the "loan date".

However, after the central bank canceled the preferential interest rate for housing loans on March 17 last year, China Merchants Bank and Bank of Shanghai changed the interest calculation method of their loans from annual adjustment to monthly adjustment. For example, the recent interest rate adjustment, Mortgage customers at the two banks will have to pay more at the new rates from May.

The interest rate adjustment standards are different, and the actual impact on the lender is the interest expense that has risen over several months. If it is the same interest rate adjustment, ICBC's customers will pay 9 months less interest rate increase than Shanghai Bank's customers, which can also be regarded as a savings.

Trick 3: Incorporate fixed-rate mortgages into your mortgage portfolio.

As interest rate hike expectations become clearer, the advantages of fixed-rate mortgages begin to emerge.

For those customers whose income growth is not expected, but they are worried that the further increase in interest rates will cause an increase in the repayment burden, it is one of the best strategies to choose a fixed-rate mortgage and pay a little capital cost to lock in the risk of future interest rate increases. After the rate hike, the correctness of this decision began to appear initially.

However, fixed-rate mortgages have not been recognized by more citizens. The main reason is that the term of fixed-rate mortgage products is generally short, and the maximum term is only 10 years. Nowadays, the loan of 600,000 to 700,000 yuan to buy a house is limited to 10 years, which makes the monthly repayment pressure too great and unbearable.

The person in charge of China Everbright Bank, the first company to launch fixed-rate mortgage products, said that borrowers can try their "fixed-rate + floating-rate" mortgage portfolio, so that fixed-rate mortgages can help borrowers resolve the risk of rising interest rates. For example, for a loan of 700,000 yuan, you can try to use 300,000 yuan of it as a 10-year fixed-rate mortgage, and the other 400,000 as a floating-rate mortgage.

It is reported that the bank's 3-year, 5-year and 10-year fixed-rate mortgages have interest rates of 5.85%, 5.94% and 6.18% respectively. For high-quality customers, the bank's fixed loan preferential interest rate even reached 5.25 %, 5.34%, 6.08%. No matter how the central bank adjusts the interest rate during the loan period, the lender enjoys the contracted fixed interest rate.

Compared with commercial housing loan customers, or loan customers who cannot enjoy the preferential interest rate, compare the floating interest rate after the interest rate increase - 6.03% for 3 years, 6.12% for 3-5 years (inclusive) and 5 6.39% for more than 2000 years, China Everbright Bank's fixed interest rate has a preferential interest rate of about 20 points. Lenders will undoubtedly enjoy the advantage of locking in loan costs brought by fixed interest rates.

However, fixed-rate loans are actually still slightly higher than floating-rate loans, since most customers can enjoy a 10% discount on interest rates. Taking China Everbright Bank as an example, its ordinary fixed interest rate is 0.43% higher than the new benchmark interest rate. If a loan with a total amount of 500,000 yuan is repaid with equal principal and interest over 10 years, the monthly repayment will be 107.62 yuan more; preferential fixed interest rate It also pays 82.42 yuan more per month.

The person in charge of the personal loan center of China Everbright Bank Shanghai Branch told reporters that it is normal for the fixed interest rate to be slightly higher than the benchmark interest rate. The borrower pays a certain capital cost, and the risk of future interest rate rises can also be locked.

The person also pointed out that after the interest rate adjustment, the interest rate level of fixed rate loans will be adjusted accordingly. For example, China Merchants Bank has announced that the fixed-rate loan interest rate will rise by 0.27 percentage points accordingly. As of press time, China Everbright Bank has not adjusted its interest rate level, but the head of the bank's mortgage department told reporters that the head office is studying the issue of raising interest rates. The interest rate level for fixed-rate mortgages introduced in the future may be higher than the current level.