According to an announcement, Guotai Haitong Securities Co., Ltd. (GTHT) has released a research report stating that on September 29, the People's Bank of China issued the "Adjustment and Improvement of Several Monetary Policy Tools" and the "Implementation of Residential Housing Loan Interest Subsidy Policy," aiming to increase support for key sectors through "targeted rate cuts plus incremental expansion." Starting from October 1, 2026, households using newly issued commercial personal housing loans to purchase their first home will receive interest subsidies at an annualized rate of 1 percentage point on the loan principal, for a period not exceeding 5 years. The firm believes this policy focuses on structural support rather than broad-based rate cuts, providing high-quality asset-side opportunities while protecting banks' net interest margins, thereby promoting a simultaneous improvement in both the volume and quality of commercial banks' mortgage businesses.

Main Observations from Guotai Haitong

On September 29, the People's Bank of China issued the "Adjustment and Improvement of Several Monetary Policy Tools" and the "Implementation of Residential Housing Loan Interest Subsidy Policy." The main contents include: adjusting and improving multiple structural monetary policy tools, and increasing support for key sectors through "targeted rate cuts plus incremental expansion." The core policy measures include: first, lowering the interest rate on Pledged Supplementary Lending (PSL) by 25 basis points (from 1.75% to 1.5%), and expanding its supported sectors to the construction of the "six major networks" including water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipeline networks, and logistics networks; second, increasing the relending quota for technological innovation and technological transformation by 200 billion yuan (raising the total quota from 1.2 trillion yuan to 1.4 trillion yuan), and uniformly raising the relending support ratio to 100%; third, increasing the relending quota for agriculture and small businesses by 500 billion yuan, of which the relending quota for private enterprises is increased by 300 billion yuan (after the adjustment, the total quota for agriculture and small business relending and rediscounting reaches 4.85 trillion yuan, and the relending quota for private enterprises reaches 1.3 trillion yuan). Overall, the firm believes this policy focuses on structural support rather than comprehensive across-the-board rate cuts, achieving targeted support for real economy sectors such as infrastructure, technological innovation, and small and micro private enterprises, while effectively safeguarding commercial banks' net interest margins and maintaining a stable operating space for the banking system.

Implementation of Residential Housing Loan Interest Subsidy Policy

The policy aims to effectively reduce the interest burden on rigid-demand groups by strengthening fiscal and financial coordination. Starting from October 1, 2026, households using newly issued commercial personal housing loans to purchase their first home (with a floor area of 120 square meters or less and a total price of 1.5 million yuan or less, excluding affordable housing and housing provident fund loans) will receive interest subsidies at an annualized rate of 1 percentage point on the loan principal, for a period not exceeding 5 years. The maximum subsidized loan amount per household is 1 million yuan, with funding shared by central and local governments at 90% and 10% respectively. Through the form of "fiscal interest subsidy funding, bank processing and deduction," the policy directly reduces homebuyers' monthly payment pressure (a 1 million yuan loan can reduce the burden by nearly 50,000 yuan over 5 years), opening up space for policy support on the demand side. Previously, affected by falling housing prices and changes in residents' income expectations, residents' willingness to take on leverage had been cautious (as of the end of June, the outstanding balance of personal mortgage loans was 36.3 trillion yuan, down 3.8% year-on-year and negative growth for 13 consecutive quarters), which also disturbed the risk indicators of banks' existing mortgage assets to some extent (taking listed bank data as an example, the non-performing loan ratio for mortgages of listed banks in Q2 2026 rose by 13 basis points from the beginning of the year to 0.96%). The firm believes the direction of this interest subsidy policy is relatively positive. On the one hand, it directly acts on the inclusive rigid-demand groups with lower thresholds, guiding housing purchase expectations back to stability by lowering residents' homebuying thresholds and immediate repayment costs, helping new mortgage loan issuance scale stop falling and rebound, and improving the credit structure and growth momentum of banks' mortgage loans. On the other hand, the reduction in monthly payment burden helps alleviate borrowers' debt repayment pressure and promotes the stabilization of banks' mortgage asset quality. From the bank's perspective, the interest subsidy policy is processed by commercial banks and requires "automatic identification and direct deduction" at the contract signing stage, which enhances customer stickiness and credit delivery efficiency without additionally increasing banks' interest concession costs. Overall, the firm believes the relevant policies provide high-quality asset-side opportunities while protecting banks' net interest margins, promoting a simultaneous improvement in both the volume and quality of commercial banks' mortgage businesses.

Risk Warnings

Policy implementation effects may fall short of expectations; accelerated decline in real estate prices.