What does lpr 60 basis points mean? How to calculate it?
LPR 60 basis points refers to an increase of 60 points based on the market loan interest rate.
1. What is LPR interest rate
The letters "LPR" refer to the "loan price interest rate", which is an interest rate formed independently by the market.
To be precise, each quoting bank makes a quotation based on the open market operating interest rate plus points, and then the National Interbank Lending Center calculates it. When handling loan business for commercial banks, it provides Pricing reference.
The banks that quoted these quotes are themselves representative commercial banks. After they quoted their quotations to the interbank lending center, the interbank lending center removed the highest price, then removed the lowest price, and weighted the average of the other prices. Get the current month’s LPR price and publish it to the public.
It is now the 20th of every month as the public day for market interest rate quotations, and the terms are divided into two periods: one-year period and five-year period.
2. How to calculate the LPR interest rate
For example: In July 2021, the LPR quotation announced by the Interbank Lending Center was: 3.85 for one year and 4.65 for five years. If you go to the bank to apply for a loan, and the bank tells you that your mortgage is LPR 60 basis points, then:
One-year LPR plus 60 points is: 3.85 0.60=4.45;
The five-year LPR plus 60 points is: 4.65 0.60=5.25.
In other words, if you have a mortgage with a term of more than five years, the execution interest rate is 5.25.
3. The significance of choosing LPR interest rate
When applying for a mortgage now, you basically choose LPR interest rate. We can also see from the definition of LPR interest rate that it follows the market, and the price of loans is related to the supply and demand of funds in the market.
The marketization of deposit and loan interest rates is also a general trend. It is also a more reasonable way for the market to determine the price. From the perspective of personal mortgage loans, using the LPR method, the interest rate in each subsequent period will depend on the LPR value in the last month of the previous cycle.
Your spread of 60 points will not change. What changes is the LPR value at the end of the regular period. The LPR value at the end of the previous period, plus your spread of 60 points, is the actual execution interest rate of your loan in the next period (usually one year). What does adding 60 basis points to a mortgage mean?
LPR plus 60 basis points is too cheating.
An increase of 60 basis points on a home loan means an increase of 0.6 on the basis of the base interest rate. This is because the interest rate of a home loan is related to the term of the loan. Because the loan period is long, the central bank's base interest rate will be higher. For example, if the loan is less than 1 year, it is 4.35, from 1 to 5 years, it is 4.75, and if it is more than 5 years, it is 4.9. At this time, if the basis point is added, it will be at this percentage point.
The rise in housing loan interest rates is usually caused by the following two reasons. One of the reasons is that the bank's capital costs are constantly increasing, and its own financing costs are also constantly increasing.
If the mortgage interest rate is not raised at this time, the bank will suffer losses. In addition, the bank's ability to absorb deposits may be reduced, forcing the bank to limit its lending scale, so the interest rate will be raised.
Another reason is that the government wants to cool down the property market, so it is carrying out macro-control. Banks have to respond to the government's policies, so they will raise interest rates, so that the cost of home loans will increase. Getting higher and higher can inhibit the behavior of real estate speculators to a certain extent.
The bank mortgage limit depends on factors
1. The borrower's repayment ability
Mainly refers to the borrower's monthly income, because monthly income is the most intuitive reflection of The relationship between the borrower's loan repayment ability, loan amount and monthly income can refer to the following formula: monthly income ≥ monthly mortgage payment X2.
2. House age
When banks issue loans, they will check the age of the loaned house. The usual requirement is 20-25 years, and the more relaxed requirement is 30 years, which is more stringent. The loan limit for second-hand houses that are older is only 15 or 10 years. The loan limit may be reduced for older second-hand houses, or the loan may be refused altogether if the bank encounters strict regulations. It can be said that the shorter the house is, the easier it is to obtain a loan, and the loan limit is also older than the house. Big and tall.
3. Personal credit report
Personal credit report can be said to be one of the important criteria for banks to consider borrowers. Good credit report is a prerequisite for obtaining preferential interest rates and loans. Some banks The borrower's credit card credit record within 2 years and loan credit record within 5 years will be examined.
Some banks will look at credit reports over a longer period, and the requirements will be different. Serious bad credit reports that are overdue three times in a row and six times in total may cause the loan to be rejected.
4. Security ability
Some banks will also examine the borrower’s payment status of medical insurance, pension insurance, accident insurance, housing provident fund, etc., because these can be reflected from the side It determines the borrower's repayment ability, of which medical insurance and pension insurance are more important. What does interest rate plus 60 basis points mean?
1 basis point is 0.01, and adding 60 basis points to the interest rate means that the interest rate rises by 0.6; while the LPR for more than 5 years released in December 2019 is 4.8, adding 60 basis points is 5.4.
Response time: 2020-09-27. For the latest business changes, please refer to the official website of Ping An Bank.
[I know about Ping An Bank] Want to know more? Come and see "I Know Ping An Bank"~