Latest Search
Quote
| Back Zoom + Zoom - | ||||
|
<Research>UBS Expects CN to Cut Mortgage Rates in Next 6-12 Mths; 100 bps Cut in Book Yield May Hit CN Bank NP by 12%
Recommend 35 Positive 45 Negative 50 |
||||
|
||||
|
Bloomberg reported last Friday (30 Aug) that China is considering allowing homeowners to refinance in mortgages to reduce borrowing costs for related families. If the report is true, the potential impact could be much greater than the September 2023 one-off rate cut, UBS released a research report saying. UBS saw 3 potential scenarios, in the order of deeper impact to Chinese banks, a one-off coordinated rate cut similar to September 2023; borrowers can refinance at the latest rate at any time, but only with their current lender; and borrowers can refinance freely with their current lender or a different bank. The timing of implementation is unclear, but UBS believed that this could happen within 6-12 months. UBS estimated that the average yield of mortgage balance for July was 4.11%, 77 bps higher than the rate of newly issued mortgages in recent months. It is expected that the rate for new mortgages will continue to fall, with the Chinese media reporting that the mortgage rate in Guangzhou is already as low as 2.89%. Assuming a 100 bps cut in book yield, UBS estimated that the underlying factor alone would reduce the net interest margin for Chinese banks by 11 bps, which, if fully converted, would be expected to result in a 7% drop in Chinese banks' net interest income or a 12% decline in the industry's net profit. AAStocks Financial News |
||||
Copied to Clipboard
 |
||||
