the dormant mortgage market: the era of prepayment

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the net profit of the six major state-owned banks is generally stable. although the overall profit level has declined in the first half of this year, it still remains relatively stable. the total net profit in the first half of 2024 reached 683.388 billion yuan, and an interim dividend was announced, which is expected to be about 204.8 billion yuan in total. this shows that state-owned banks still have a certain ability to cope with the changes in the economic environment.

however, the challenges brought by mortgage transfer cannot be ignored. mortgage transfer involves the credit and property evaluation of existing property owners. if the original mortgage of the owner is overdue, for the bank transferring the mortgage, it is equivalent to taking over an asset package with poor qualifications and poor repayment ability. in this way, even if the mortgage can be transferred, the bank transferring the mortgage must re-evaluate the property value of the owners to reduce its own risk of taking over.

"re-mortgage" is not a simple alternative. it requires a re-examination of the value of the house and the mortgage debt to avoid situations such as "bank a loaned 4 million, and bank b re-evaluated 3 million after the mortgage was transferred." in addition, the senior management of the central bank's monetary policy department stated that there may be resistance to further downward movement of deposit rates, which will have a significant impact on bank interest income. assuming a one-time interest rate cut of 80bp, banks' interest income will decrease by about 304 billion, accounting for 12.77% of the banking industry's net profit of 2.38 trillion in 2023, which means that deposit interest rate adjustments will directly affect the overall market expectations and drive changes in capital flows.

in recent years, deposit interest rates have been falling, which is not only a factor in the change of bank interest income, but also reflects the changes in social investment demand and consumption demand. small and medium-sized banks in various places have also lowered their deposit rates, from 1.55% of shanghai bank to the one-year deposit rate. these actions mean that the overall market expectations will continue to change.