What are the problems with the current mortgage interest rate pricing mechanism? How to improve it? A: According to the contract agreement, the additional points portion of the mortgage on the LPR basis is fixed during the contract period. Mortgage contracts generally have a long term, and fixed point increases do not reflect changes in factors such as borrowers' credit, market supply and demand. Once the market situation changes, it can easily cause interest spreads between old and new mortgages to widen. As interest rate marketization reforms continue to deepen, it is necessary to optimize system design to encourage commercial banks and borrowers to change contracts in an appropriate manner. In August 2023, in order to fully respond to the demands of the public and based on the principle of urgent use first, the People's Bank of China, together with the General Financial Supervisory Authority, guided commercial banks to adjust interest rates on existing mortgages in batches using negotiations to change contract interest rates, etc., with good results. However, since the current mortgage interest rate pricing mechanism cannot be adjusted independently, the dispute between new and old mortgage interest rate spreads has accumulated and widened once again recently. Through industry self-regulation and coordination, commercial banks will carry out another batch adjustment on eligible existing mortgages to reduce interest rates close to interest rates for newly issued mortgages across the country. However, the above method treats the symptoms rather than the root causes. To fundamentally resolve the issue of interest spreads between old and new mortgages, it is also necessary to break down institutional barriers through deepening interest rate marketization reforms, while maintaining the seriousness of contracts, and promote independent negotiations and dynamic adjustments between commercial banks and borrowers based on the principle of marketization.

What are the problems with the current mortgage interest rate pricing mechanism? How to improve it? A: According to the contract agreement, the additional points portion of the mortgage on the LPR basis is fixed during the contract period. Mortgage contracts generally have a long term, and fixed point increases do not reflect changes in factors such as borrowers' credit, market supply and demand. Once the market situation changes, it can easily cause interest spreads between old and new mortgages to widen. As interest rate marketization reforms continue to deepen, it is necessary to optimize system design to encourage commercial banks and borrowers to change contracts in an appropriate manner. In August 2023, in order to fully respond to the demands of the public and based on the principle of urgent use first, the People's Bank of China, together with the General Financial Supervisory Authority, guided commercial banks to adjust interest rates on existing mortgages in batches using negotiations to change contract interest rates, etc., with good results. However, since the current mortgage interest rate pricing mechanism cannot be adjusted independently, the dispute between new and old mortgage interest rate spreads has accumulated and widened once again recently. Through industry self-regulation and coordination, commercial banks will carry out another batch adjustment on eligible existing mortgages to reduce interest rates close to interest rates for newly issued mortgages across the country. However, the above method treats the symptoms rather than the root causes. To fundamentally resolve the issue of interest spreads between old and new mortgages, it is also necessary to break down institutional barriers through deepening interest rate marketization reforms, while maintaining the seriousness of contracts, and promote independent negotiations and dynamic adjustments between commercial banks and borrowers based on the principle of marketization.