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From ChatGPT, I was told that China banks made a total net profit of ~2.4trillion yuan in 2023. So the regulation-induced mortgage rates' decrease will result in 300bil/2.4trillion ~12.5% drop in profits on aggregate, and it is quite substantial. If we were to couple with a NPL increase as a result of the worsening economy, that would be a big whammy.
China weighs cutting mortgage rates in two steps to shield banks
“In essence, it’s a transfer of wealth from banks to households, so positive for consumption,” Larry Hu, head of China economics at Macquarie Group, wrote in an Aug 31 note. If all existing mortgages are to be refinanced, borrowers can save about 300 billion yuan (S$55 billion) in interest payments annually, equivalent to 0.6 per cent of the nation’s retail sales or 0.2 per cent of its gross domestic product, he estimated.
https://www.businesstimes.com.sg/propert...ield-banks
China weighs cutting mortgage rates in two steps to shield banks
“In essence, it’s a transfer of wealth from banks to households, so positive for consumption,” Larry Hu, head of China economics at Macquarie Group, wrote in an Aug 31 note. If all existing mortgages are to be refinanced, borrowers can save about 300 billion yuan (S$55 billion) in interest payments annually, equivalent to 0.6 per cent of the nation’s retail sales or 0.2 per cent of its gross domestic product, he estimated.
https://www.businesstimes.com.sg/propert...ield-banks