A "small step" in a fourth-tier city may become a "giant leap" for the whole country!

Meizhou,Guangdong,announced that if banks want to obtain regular deposits of housing provident funds,they must prepare an equivalent amount of qualified bonds as collateral and register them as pledges at the Central Treasury Registration and Settlement Company!

This is a national first,and it will have a profound impact on the real estate market,stock market,bond market,and the business logic of small and medium-sized banks.

Reading this,many readers may be puzzled: What does this mean?

In layman's terms: As deposit interest rates continue to fall,preserving and increasing the value of housing provident funds has become a major challenge.

To obtain higher interest,one can only deposit regularly in small and medium-sized banks.

The relationship between banks and interest rates is: the larger and safer the bank,the lower the interest rate it offers; the smaller the bank,the greater the risk,but the higher the interest rate it offers.

Housing provident fund deposits are deposits that local governments can influence.

Supporting local small and medium-sized banks is an important task for local housing provident fund centers.

However,placing money in local small and medium-sized banks increases the risk,as these banks are less secure.

What to do?

Let these banks use high-grade bonds as collateral and register the mortgage at the "Central Treasury Registration and Settlement Company."

This is like someone borrowing a huge sum from you,and in addition to asking them to pay interest,you also require them to mortgage their property and go to the housing registration department to handle the mortgage procedures.

According to Meizhou's 2023 housing provident fund annual report,the number of employees who actually paid into the housing provident fund is 277,700.

Among them,the proportion of "government agencies + public institutions + state-owned enterprises" within the system reached 68.9%,ranking third among cities in Guangdong.

The proportion of housing provident fund contributors within the system is an indicator I created three years ago to observe the competitiveness of cities for the first time.

The higher the indicator,the stronger the system,the lower the economic activity,and the lower the value of real estate investment.

At the end of 2023,most of Meizhou's housing provident fund deposits (3.34 billion yuan),after deductions for withdrawals and loans,were kept in bank deposits,with current deposits of 1.8 million yuan,and almost all the rest were term deposits,with term deposits of more than one year amounting to 1.22 billion yuan.

Preserving and increasing the value of housing provident funds is a big challenge.

High-risk investments (such as equity investments) cannot be made,and only government bonds,bank deposits,or loans for affordable housing can be considered.

In 2023,the return on Meizhou's housing provident fund was only 1.46%,slightly lower than the national and Guangdong provincial average.

Looking across the country,provinces with high housing provident fund investment returns (such as Qinghai) only have a rate of 1.64%; lower ones (such as Tibet) only have a rate of 0.68%.

Most provinces have not exceeded 1.5%.

This year,the decline in bank deposit interest rates has further squeezed the investment return rate of housing provident funds.

Under these circumstances,if you want to get higher deposit interest,you can only choose to deposit in small and medium-sized banks.

However,during the economic downturn,small and medium-sized banks may face the risk of default.

Therefore,Meizhou requires banks bidding for housing provident fund deposit business to provide "qualified bonds" as collateral.

What is a "qualified bond"?

It is a bond with lower risk and higher credit,such as government bonds,local bonds,and bonds of enterprises with high credit ratings.

By the end of last year,the balance of housing provident funds deposited nationwide,minus the loan balance,which is the money available for investment,is about 2.2 trillion yuan,most of which is bank deposits.

The foreseeable future is: will these housing provident fund deposits move from large banks to small and medium-sized banks?

Why?

Reason one,depositing in small and medium-sized banks can obtain higher interest,and the risk is hedged through "qualified bond collateral"; reason two,small and medium-sized banks are banks under local governments,and depositing money helps support "their own banks"; reason three,moving deposits is beneficial to support the local real estate market.

It is now difficult to sell land,and local state-owned enterprises (urban investment companies) can only buy land and then get loans from banks to support local finances.

The banks that dare to lend to financing platforms in small and medium-sized cities are the "own banks" of the local area.

To support "their own banks," of course,it is more necessary to move the housing provident fund loans.

Housing provident fund deposits are just the first step,and in the future,government deposits,state-owned enterprise deposits,and pension deposits,will they all require "qualified bonds" as collateral?

If so,how many bonds are needed?

I'm afraid it's at least tens of trillions.

This is a big benefit for the bond market,especially for government bonds and local bonds.

Small and medium-sized banks are already keen on buying such bonds,and even buy them on leverage - interest rates will continue to fall,and the bond market has always been very hot.

What if local governments require higher registration of pledged bonds in the future?

That would be a great benefit for government bonds,and everyone can only use government bonds as collateral.

Is it good for the real estate market?

It can be considered good,after all,the return obtained by the holders of housing provident funds has increased,and the support for the real estate market has been strengthened theoretically.

Don't think that the support of housing provident funds for the real estate market is dispensable.

Currently,there are 175 million people in China with housing provident funds,and last year they paid a total of 3.47 trillion yuan.

Last year,a total of 2.66 trillion yuan of housing provident funds were withdrawn for renting,decorating,and consumption; in addition,last year,the country issued 2.86 million housing provident fund loans,totaling 1.47 trillion yuan.

Last year,the total transaction amount of new and second-hand houses in the country was 17.4 trillion yuan,and the new housing provident fund loans accounted for 8.4% of the total transaction amount,and this money has a low interest rate and can play a great leverage effect.

Statistics also show that the most popular use of housing provident fund loans to buy houses is in the Yangtze River Delta,especially in Shanghai and Jiangsu.

In contrast,residents in the Greater Bay Area and the Beijing-Tianjin-Hebei region are less enthusiastic about buying houses with housing provident funds.

For example,in 2023,Guangdong,the province with the largest population and economy,issued only 200,000 housing provident fund loans,amounting to 119.1 billion yuan; while Jiangsu,with a much smaller population,issued 300,000 loans,amounting to 162.5 billion yuan.

At the end of 2023,the personal housing loan rates of housing provident funds in Jiangsu,Zhejiang,and Shanghai were 87%,89%,and 78%,respectively,while Beijing and Guangdong were 67% and 74%,respectively.

Finally,comment on the hot financial news in the past two days: News 1: PB's short essay came again yesterday,saying that the country may reduce the interest rate of existing mortgages as early as September.

Analyzing the rumors of adjusting existing mortgages,it is said through the industry that adjusting the interest rate of existing mortgages needs to consider multiple factors comprehensively,so the adjustment needs a process.

The implication is: it will be reduced,but wait a bit.

Then,the article also analyzed the impact on banks if the interest rate is reduced and how to respond.

The Securities Daily is hosted by the Economic Daily,and who hosts the Economic Daily,everyone can search it by themselves.

Therefore,the probability of reducing existing mortgages is very high,but the timing is unknown.

I think it is very likely to be announced in September or October,and it will be implemented in December.

News 2: Last night,the European Central Bank announced the second interest rate cut of the year.

The interest rate cut is: the deposit mechanism rate is reduced by 25 basis points,and the main refinancing and marginal lending rates are reduced by 60 basis points.

This means that the probability of the Federal Reserve starting the interest rate cut cycle next week has been further increased.

Many institutions believe that it is very likely that the Federal Reserve will cut interest rates by 75 to 100 basis points within the year.

There are still 3 interest rate meetings left in the year,and it is possible that all three will cut interest rates,and one of them may not rule out double interest rate cuts (50 basis points).

We have reason to believe that the People's Bank of China will at least announce one reduction in reserve requirements or one interest rate cut in September,and it is also possible that both will come.

If the interest rate is reduced,then the housing provident fund loan interest rate will also be reduced.

Because the gap between the current first housing loan interest rate in some cities and the housing provident fund loan interest rate is less than 10 basis points.