The report also highlights the significant decrease in both residents' deposits and loans in July, indicating that the improvement in residents' preference for purchasing homes may not be directly linked to demand policies, but rather affected by long-term factors such as urbanization and industrialization disparities. Furthermore, the report suggests that the funds used for early repayment of loans, which were concentrated in the first half of the year, might be a result of residents' avoidance of the higher interest rates. This implies that it is increasingly necessary to lower interest rates on existing housing loans, as the cost of lowering loan rates is likely lower for banks compared to shrinking their loan portfolios.
The author also notes that another important aspect of the July financial data is the accelerated decline in M2 (a measure of money supply) compared to the previous month. The report attributes this decline to the changes in the pace of fiscal deposits, which were delayed until July. However, with continued early repayment by residents and the conversion of funds into business activities, M2 is expected to further decline. The report suggests that lowering reserve requirements could help stabilize the growth of M2, while also benefiting commercial banks by stabilizing their profits.
