What happened
China's central bank and financial regulator issued a joint document reforming real estate credit management, extending the maximum personal mortgage term to 40 years and capping the loan at the appraised value of the property. For loans lasting one year or less, borrowers may repay in a lump sum at maturity or in monthly installments; loans longer than one year require monthly repayment.
A National Business Daily investigation found that banks are at varying stages of adoption. A China Construction Bank staffer in Beijing said the maximum term is now 40 years but specific procedures have not been finalized, and the bank is awaiting directives from higher-ups. Industrial and Commercial Bank of China representatives said they can take inquiries but are not yet accepting formal applications. Some media reports suggest certain banks already allow new applicants to choose 40-year mortgages, and a few may let existing borrowers extend their terms.
Bank staff estimate implementation guidelines will arrive in roughly a week. CCB personnel said the bank is still studying an execution plan and will post a notice on its official website. The new policy takes effect immediately, while mortgage contracts signed before the issuance date will continue under their original terms.
Why it matters
The move to lengthen the maximum mortgage term from 30 to 40 years is seen as a major easing for homebuyers. Qianhai Open Source Fund chief economist Yang Delong said the policy drove the real estate sector to open sharply higher on August 31, with multiple stocks hitting daily limits. He argued that reducing borrowers' monthly repayment pressure can help restore confidence and stabilize the market.
Yet Yang cautioned that the market is unlikely to return to rapid growth as China's urbanization approaches completion. He expects properties in core areas of first- and second-tier cities, supported by rigid demand and scarcity, to stabilize and rebound first, while non-core areas may keep declining. He advised staying cautious in real estate investment and favoring well-located homes for rigid and improvement needs.
Key facts
The PBOC and the National Financial Regulatory Administration jointly issued the real estate credit reform document.
The maximum personal housing loan term is extended to 40 years, and the loan amount cannot exceed the appraised value of the home.
Loans of one year or less can be repaid at maturity or monthly; loans over one year must be repaid monthly.
Banks are accepting consultations but many locations are still waiting for detailed implementation rules.
Existing mortgage contracts signed before the policy's issuance will continue as agreed.
An economist said the policy boosted the real estate sector and may support prices in core urban areas.
What to watch next
Banks' official implementation rules are expected within about a week, including how they will apply the 40-year term to new and possibly existing mortgages.
The PBOC has yet to issue specific personal housing loan interest rate policies under the new framework, according to the document.
Market reactions will be observed to see if the policy stabilizes home sales and prices, especially in core first- and second-tier cities as the economist suggested.