China's LPR remained unchanged for three consecutive months

China's loan market quote rate (LPR) remained unchanged in May, as in the previous two months.

Comprehensive Thepaper.cn news and First Finance and Economics, the People's Bank of China authorized the National Interbank Lending Center to announce the May LPR offer on Monday (May 20), the one-year LPR is 3.45%, and the five-year LPR is 3.95%, all of which remain unchanged.

At the Medium-Term Lending Facility (MLF) renewal in May, the one-year MLF rate, which is the medium-term policy rate, was left unchanged. As a result, the market expects LPR to remain unchanged in May.

In the context of the unchanged MLF interest rate, in February this year, the LPR interest rate of more than five years, which is the reference benchmark for the pricing of personal housing loans and corporate medium and long-term loans, fell by 25bp, which is the largest reduction since the reform of LPR. The one-year LPR rate was last cut in August.

Wen Bin, chief economist of Minsheng Bank, believes that the flat LPR offer in May was mainly due to: first, the MLF interest rate remained unchanged in May, and the pricing basis of LPR offer did not change. Second, the loan interest rate continues to decline, the bank's net interest margin continues to be under pressure, and the LPR quotation has no room for short-term reduction. Third, a number of cost reduction measures have been introduced in the field of personal housing loans, and the urgency and necessity of lowering LPR again has declined. Fourth, some of the current credit interest rates have been low, LPR offers remain unchanged, but also aimed at air defense, improve efficiency.

Wen Bin believes that the policy interest rate is stable in the short term, but the deposit rate cut and so on open a certain downside space for the follow-up LPR quotation. He pointed out that in the future, the Federal Reserve's interest rate cut expectations have increased, and the pressure on the stable exchange rate has been relatively reduced compared with the previous period. Under the restriction of ultra-self-regulated deposits, there is a strong certainty that the deposit cost will decrease significantly within the year. In this context, if prices rebound and the overall repair of endogenous financing demand is still not optimistic, it is necessary to further reduce the actual financing cost, thus increasing the probability of reducing the policy interest rate and LPR quotation.

On May 17, the central bank of China issued a combination of optimized housing finance policies, including lowering the minimum down payment ratio of personal housing loans, lowering the interest rate of personal housing provident fund loans, canceling the national level of the first housing and two housing commercial personal housing loan interest rate policy floor, and proposing to set up 300 billion yuan (RMB). S $56.9 billion) affordable housing reloans accelerate the destocking of existing commercial housing.