Many people have heard of the mortgage rate, but what is the pledge rate? What exactly does the pledge rate mean? This article will introduce the pledge rate to you. What role does the pledge rate play? If you want to know more about the pledge rate, you can follow me.

Is the pledge rate high or low?

The pledge rate refers to the ratio of the loan principal to the market value of the standard warehouse receipt, which is generally reasonably determined according to the price difference between the futures and the spot, the price fluctuation range and trend. When the price difference is large, the price fluctuates greatly and the price tends to fall, the pledge rate is relatively low, on the contrary, the pledge rate can be higher. The adjustment of the upper limit of pledge rate is decided by the People's Bank of China and China Banking Regulatory Commission.

Calculation formula of pledge rate: pledge rate = (loan principal/market value of standard warehouse receipt) × 100%. Generally speaking, in order to prevent the risk of loan recovery, lending institutions use the value of the borrower's pledge to pay off debts when the borrower can't repay the money, and the value of the pledge is often greater than the loan itself.

It is understood that the pledge rate is generally set by credit institutions, and the role of the pledge rate is actually to prevent the risk of default, as well as to make up for losses and processing costs. Well, this is my share of the pledge rate. I hope it will help everyone.