One month after bank deposit interest-raise in China

The People's Bank of China announced the raise of deposit interest on 29 October, thus putting an end to the 9-year-long period of deposit interest reduction in China.

The deposit interest, as the most basic tool for currency policy is just like the central nerve at the helm of the financial market, which also affects stealthily the economic life of the ordinary people. The investigation done by a well-known portal website at home indicates, about 40 percent of those investigated are of the opinion that the interest-raise has exercised a great impact on the life of individuals and those who thought of no influence are below 10 percent.

Now a whole month has elapsed after the deposit interest-raise and the reporter jotted down what subtle changes the interest-raise has brought about on the life of the ordinary people in the three metropolises of Beijing, Shanghai and Guangzhou in China.

Beijing: automobile-buyers take a reasonable look at the interest-raise

After the interest-raise, the loan-consumption including the car purchasing has become topics on the lips of the people. However, we came to discover in the interviews that the majority of consumers in Beijing took a reasonable attitude towards it for the interest-raise was on no big scale. The interest loss of 0.27 percentage point doesn't count anything much and the buyers will "buy" it when they find a desirable type of car. But if they do not have an urgent need of the car for the time being they will wait and see and maybe the car price reduction can offset the losses in the interest-raise sometime afterwards.

The data given by the financial transaction center of a bank in Beijing indicate, if the mortgaged purchase of a car costing RMB 200,000 yuan which is to pay off in 5 years the interest to pay after the interest-raise is RMB 544.40 yuan each month, plus the principal interest, making up RMB 3877.73 yuan which is only 33.45 yuan over that before the interest-raise. So with regard to this a certain Mr. Zhou who's ready to buy a car recently said offhandedly without hesitation, "I'll buy it when getting prepared and the interest-raise doesn't matter much."

A person responsible for credit management of a certain bank in Beijing expressed, in view of the present situation the number of clients doing loans for car purchasing saw no obvious changes as against that before the interest-raise He is of the opinion that the minute modulation of the deposit interest wouldn't affect directly and ostensibly on the car-buying consumers. Nevertheless we mustn't take lightly the psychological shadows it cast on the consumers.

In an auto market in the area of Asian Games Village in Beijing the reporter learned that the buying of medium-and-high-grade autos turned out good while the shopping for cars of economical type turned to go slow.

A consultant for auto-selling holds after analysis, this shows whoever is able to buy medium-and-high-grade autos doesn't mind much the bank interest-raise whereas for those who are not quite comfortably off but want to buy cars will hold back temporarily when they are facing the situation in which the auto-price continues to go down and the bank interest is likely to be raised again.

Shanghai: the interest-raise makes the real estate business to stay glued

A long queue appeared in front of the selling office for the newly quoted buildings even 10 days ago but the daily exchange amount of the first-hand buildings lingered without going forward. The quotation for new houses saw for several times to break through an average of over 10,000 yuan a square meter and the media exclaimed that it was an "astronomical price". However, the buyers still held that "you should buy what you want to". But behind the contradictory superficial phenomenon in the commercial apartment market in Shanghai the arguments between the long and the short are glued to each other since the interest-raise over one month ago in Shanghai.

A 42-year old Mr. Sun has been engaged for some 8 years in Shanghai real estate business. At that time he resigned from his post and "having nothing to do at home he bought an apartment" but felt that could get in a lot from it and so he was unable to stop any more. For the moment he has in hand a total of 7 flats consisting of 3 bedrooms with two anterooms and one bedroom with one anteroom. "I had nine flats with me in September and sold out 2 flats in October. But after the interest-raise I sell out none." Sun said "every time when I buy in a flat I'll reckon roughly according to the peripheral situation and the quotations in future and then work out an expected amount of profit. I'll sell when up to what I wish for or keep it if otherwise. I don't mind very much the interest-raise," said Mr. Sun.

For the moment the 4 flats out of 7 are bought in my own name and in the name of my wife and child that are all at my own expenses while the other 3 flats are bought with 70 percent of bank loans on mortgage but still with a surplus of over 1.6 million yuan in hand. When the standard interest-rate of the PBOC was raised 0.27 percentage point he paid 500 yuan more every month. "This is within the bearable scope," Sun said.

With regard to the forecast of a possible cycle of interest-raise Mr. Sun has a smug calculation of his own. "If the bank is going to raise interest-rate again it'll be a few months later as I reckon or even farther later and will be raised in a slowly progressive way. So long as my established profit goal is up to the market standard and leave some leeway for buyers there'll be chances for me to sell out. What is more important is that the housing price in Shanghai has always been very good and though it will enter into a period of being adjusted at a high price level I won't lose so long as the inflation is going to be controlled within 7 percentage points."

The glued situation hasn't roused a heated wave to pay back loans early in the mortgaged housing market in Shanghai. And the information from the intermediaries for the second-hand housing properties also indicates that "there's no big difference" before and after the interest-raise.

Guangzhou: the financial management of the ordinary people moves along with the modulation of the interest-rate

The Cantonese with a relatively advanced idea for financial management pay high attention to the norm "safe in the pocket". Whenever a new policy is to be issued the first and foremost thing to do is to rearrange once again properties of ones own. Right on the heel of the interest-raise there appeared in many banks in Guangzhou the "whole family go to put money in the bank" and many people even got the money out from the bank to re-put it in. A 25-year old Miss Li joined the queue for re-putting the money in the bank after she made a smug calculation on how much to lose when getting the deposit out in advance and the benefit to get after re-putting it in. "Get in one yuan more when you are able to."

However, most of the Cantonese held a circumspect attitude. A certain Mr. Jiang who's just bought a flat in Lijiang Garden with loans on mortgage made a calculation. The interest rate for housing loan of over 5 years is raised from 5.04 percent to 5.31 percent and for the 500,000-yuan housing loan of his for a period of 20 years he has to pay 75.17 yuan more per month and the accumulated interest he has to pay is 18,000 yuan in total. Originally he was ready to pay off in advance but the bank said he had to pay 50,000 yuan more to do it. Fumbling a while in his purse Mr. Jiang felt that it was still bearable to pay scores of yuan more every month.

A person in charge of the business department of the Industrial and Commercial Bank in Guangdong Province said that for the moment there hasn't seen any phenomenon to pay off the loans in advance on an extensive scale and loans for housing properties are still on the rise. Even though there are some people to pay back loans in advance most of them are the building-speculators who have enough money ready in hand.

The life insurance market saw a smooth operation in Guangzhou. A certain Lady named Liu who've just handed in her premium said I would lose quite some service charges if I were to draw back the money. And moreover, I was not sure whether I could get in any benefit from investment. Therefore, she wouldn't change her insurance scheme because of the interest-raise.

By People's Daily Online