One statement holds that fixed rate housing loan is theoretically sound but is not feasible in practice. After taking the lead in introducing fixed rate loan, China Everbright Bank (CEB) proved the statement wrong with solid statistics. Currently, more than 1000 clients have applied for fixed rate loan for residential housing or commercial housing, with total loans issued by CEB reaching RMB hundreds of millions. At the same time, CEB also took the lead in introducing Interest Rate Swap (swap between fixed rate and floating rate), the upgraded ¡°Sunshine Living¡± fixed rate housing loan, designed to further ¡°activate¡± the fixed rate market and maintain its leading position and innovative advantages
With regard to the Interest Rate Swap, clients who wish to swap from floating rate housing loan to fixed rate housing loan (including residential and commercial housing) would be charged no contractual penalty or service fees. Clients of fixed rate loans with duration of one year or more may also apply to swap to floating interest rate by paying a certain amount of contractual penalty. And clients of fixed rate loan with duration of five year or above would be charged no contractual penalty.
In response to clients¡¯ needs, CEB has launched the Interest Rate Swap product so as to provide clients with flexibility in avoiding risks caused by interest rate fluctuation. The product makes it easier for clients to plan household expenditures, reduce borrowing costs and carry out family financing, hence promoting more clients to choose fixed rate housing loan, further expanding the market for fixed rate loan in the industry.
Aside from launching Interest Rate Swap, CEB has also added the three-year fixed rate housing loan as an additional type of loan to the fixed rate housing loan family. To all kinds of fixed rate housing loans on residential and commercial housing, interest rate range management has been applied. Preferential interest rates may be given to quality clients.
As of the fixed rate housing loan, relevant interest rates are shown in Table 1 and Table 2.
Table 1 Relevant Interest Rates of the Fixed Rate Residential Housing Loan
| Interests rate |
Term of the Loan |
| Less than 3 years |
3~5 years |
5~10 years |
| Benchmark |
5.85% |
5.94% (no changes) |
6.18% (no changes) |
| Floating-upward |
6.05% |
6.14% |
6.38% |
| Preferential |
5.25% |
5.34% |
6.08% |
Table 2 Relevant Interest Rates of the Fixed Rate Commercial Housing Loan
| Interests rate |
Term of the Loan |
| Less than 5 years |
5~10 years |
| Benchmark |
6.18% (no changes) |
6.42% (no changes) |
| Floating-upward |
6.48% |
6.72% |
| Preferential |
5.98% |
6.22% |
Preferential interest rates may be applied to quality clients. All of the preferential interest rates, 5.25% for three-year period, or 5.34% for five-year period and 6.08% for ten-year period, are lower than that of competitors thus have comparative advantages.
After taking the lead in launching ¡°Sunshine Living¡± fixed rate housing loan in China, CEB now has a client base exceeding 1000, with total loans issued hitting RMB hundreds of millions, taking up a significant portion of the market share.
CEB is the first to launch both fixed rate residential housing loan and fixed rate commercial housing loan, which greatly enhances the popularity of its personal loan products and helps to take up more market share. CEB has received sound economic return, and has demonstrated first-mover advantages.
As the competition in the area of fixed rate housing loan becomes fiercer, CEB has accurately grasped the dynamics of the market and managed to meet the needs through continuous innovation, upgrade and optimization, which reflects its market-oriented and client-centered philosophy, strong capability in innovating new products and the fact that fixed rate housing loan will enjoy a sound development prospect. |
