China extends mortgage terms to 40 years

China’s latest property push is trying to reduce the monthly cost of buying a home without announcing a return to the debt-fueled model that drove the last boom. A package of measures published around August 28 and followed by local easing steps in Beijing, Shanghai and other cities focused on mortgage rules, home-purchase eligibility, provident-fund lending and developer financing. State-backed reports and market interviews published on September 2 said some cities had extended the maximum mortgage term from 30 years to 40 years, while buyer inquiries and apartment viewings picked up in first-tier cities. ### Where did the 40-year mortgage headline come from? August 28 was the key date cited by Chinese securities and property reporters covering the latest round of housing measures. A China Securities Journal report carried by 10jqka said a Shenzhen agency manager told reporters that buyers were asking about “individual housing loan terms extended to as long as 40 years” after the new mortgage policy was released that day. A separate Securities Times report, also carried by 10jqka, said the same issue had become one of the most-asked questions from prospective buyers. (english.shanghai.gov.cn) September 2 reporting from Shanghai’s official English-language portal said the broader package covered the full chain of property development, sales and financing. That report did not itself spell out the 40-year term as a nationwide rule, but it described the measures as part of a wider effort to reform the real-estate development, financing and sales system. ### What else changed besides mortgage length? (news.10jqka.com.cn) Beijing moved earlier than the late-August national package. An August 7 Xinhua report said the city eased purchase restrictions for non-local families and raised housing provident-fund loan limits in a bid to stabilize the market. Under the new rules, the social-security or tax-payment requirement for some non-Beijing households buying homes inside the Fifth Ring Road was cut from two years to one year. (english.shanghai.gov.cn) Shanghai followed on August 25 with what local officials called a new set of property measures. The city removed purchase restrictions on suburban homes and adjusted lending and subsidy policies, according to the Shanghai government’s English-language site. A 10jqka report on August 20 described the “沪八条,” or “Shanghai eight measures,” as covering provident-fund optimization, personal housing credit, trade-in subsidies and other support steps. (english.scio.gov.cn) September 1 and September 2 market reports said other cities also adjusted down-payment ratios, raised provident-fund ceilings and introduced subsidies such as interest support or “sell old, buy new” programs. Guangdong Housing Policy Research Center chief researcher Li Yujia told Securities Times that the combination reduced purchase costs and helped release housing demand. ### Why would officials stretch a mortgage to 40 years? A longer mortgage lowers the monthly payment even if it raises total interest over the life of the loan. (english.shanghai.gov.cn) That matters in a market where policymakers are trying to pull in first-time buyers and upgraders without engineering a broad price surge. September 2 reporting from China Securities Journal said the buyers most visibly returning to agencies in Beijing, Shanghai and Shenzhen were just-need and improvement buyers. Beijing Lianjia manager Bi Xiadi said demand rose after the city’s August 7 easing, while Shanghai and Shenzhen agents said consultations and viewings increased after the late-August measures. (news.10jqka.com.cn) ### Is there evidence the policy changed behavior? Shenzhen posted one of the clearest early numbers. Shenzhen’s housing bureau data, cited by China Securities Journal on September 2, showed combined August transactions of new and existing homes at 6,864 units, up 8.5% from a year earlier. Shanghai also showed a short-term pickup. Shanghai housing data cited in the same report showed 2.21 million square meters, or 24,300 units, of new and existing home sales in August, up 2% from July and 15% from a year earlier. (news.10jqka.com.cn) The report also said second-hand online signings on August 29 and August 30 reached 1,248 and 1,042 units respectively. Beijing’s August data were firmer than many other cities. Beijing housing commission figures cited by China Securities Journal showed new-home online signings at 0.31 million units-equivalent and existing-home signings at 1.37 million units-equivalent in August, with existing-home deals above 13,000 for a sixth straight month. (news.10jqka.com.cn) ### Does this mean China has fixed its property slump? September 2 commentary on Shanghai’s government site said the measures were meant to speed the construction of a “new development model” for real estate and reduce risks around project delivery. (news.10jqka.com.cn) That language suggests officials are still treating the sector as a reform problem as much as a sales problem. Recent market reports were also careful about the timeline. (news.10jqka.com.cn) Securities Times said policy effects usually enter a concentrated release phase one to two months after rollout, and China Securities Journal said analysts expected “Golden September and Silver October” demand to improve as local measures took hold. The next test will be September transaction data and follow-up notices from city housing bureaus and provident-fund authorities. (news.10jqka.com.cn) (english.shanghai.gov.cn)