Guotai Haitong: Mortgage interest subsidies bolster the release of rigid demand; structural monetary easing provides targeted support.

Guotai Haitong 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 the Residential Housing Loan Interest Subsidy Policy," increasing support for key areas through "targeted rate cuts + incremental expansion," and starting from October 1, 2026, providing interest subsidy support to resident families using newly issued commercial personal housing loans to purchase their first home, at an annualized rate of 1 percentage point on the loan principal, for a period not exceeding 5 years. The bank believes that this policy focuses on structural support rather than comprehensive broad-based rate cuts, providing a high-quality asset-side lever while protecting banks' net interest margin income, promoting commercial banks to achieve both volume and quality improvement in mortgage business. Guotai Haitong's main views are as follows: On September 29, the People's Bank of China issued the "Adjustment and Improvement of Several Monetary Policy Tools" and the "Implementation of the Residential Housing Loan Interest Subsidy Policy," with main contents including: Adjusting and improving multiple structural monetary policy tools, increasing support for key areas through "targeted rate cuts + incremental expansion." The core policy contents include: First, lowering the Pledged Supplementary Lending (PSL) rate by 25bp (from 1.75% to 1.5%), and expanding its support areas to the construction of the "Six 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 re-lending quota for technological innovation and technological upgrading by 200 billion yuan (total quota increased from 1.2 trillion yuan to 1.4 trillion yuan), and uniformly raising the re-lending support ratio to 100%; Third, increasing the re-lending quota for agriculture and small businesses by 500 billion yuan, of which the re-lending quota for private enterprises increased by 300 billion yuan (after adjustment, the total quota for agriculture and small business re-lending and rediscounting reached 4.85 trillion yuan, and the private enterprise re-lending quota reached 1.3 trillion yuan). Overall, the bank believes that this policy focuses on structural support rather than comprehensive broad-based rate cuts, achieving precise drip irrigation to real economy areas such as infrastructure, technological innovation, and small and micro private enterprises, while effectively balancing the protection of commercial banks' net interest margins and maintaining the stable operating space of the banking system. Implementing the residential housing loan interest subsidy policy, effectively reducing the interest burden of rigid-demand groups by strengthening fiscal-financial coordination. Starting from October 1, 2026, for resident families using newly issued commercial personal housing loans to purchase their first home (with a building 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), interest subsidy support will be provided at an annualized rate of 1 percentage point on the loan principal for a period not exceeding 5 years, with a maximum subsidized loan scale of 1 million yuan per household, and funds shared by central and local governments at 90% and 10% respectively. This policy directly reduces homebuyers' monthly payment pressure through the form of "fiscal funding for interest subsidies, bank processing and deduction" (a 1 million yuan loan can reduce the burden by nearly 50,000 yuan cumulatively over 5 years), opening up space for policy support on the demand side. Previously, affected by housing price declines and changes in residents' income expectations, residents' willingness to leverage has been relatively cautious (as of the end of June, the 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 caused some disturbance to the risk indicators of banks' existing mortgages (taking listed bank data as an example, the mortgage non-performing loan ratio of listed banks in 26Q2 rose 13bp from the beginning of the year to 0.96%). The bank believes that this interest subsidy policy orientation is relatively positive. On the one hand, it directly acts on the inclusive rigid-demand groups with lower thresholds, guiding housing purchase expectations to return to stability by lowering residents' housing purchase thresholds and immediate repayment costs, helping new mortgage loan issuance scale to stop falling and rebound, and improving the credit structure and growth momentum of bank mortgage loans; On the other hand, the reduction in monthly payment burden helps ease borrowers' debt repayment pressure and promotes the stabilization of bank 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 correspondingly enhances customer stickiness and credit delivery efficiency without additionally increasing banks' interest concession costs. Overall, the bank believes that the related policies provide a high-quality asset-side lever while protecting banks' net interest margin income, promoting commercial banks to achieve both volume and quality improvement in mortgage business. Risk warnings: Policy implementation effects falling short of expectations; accelerated decline in real estate prices.