China’s real estate market continues to slump, prompting several regions to introduce new policies in an attempt to reverse the downward trend. One of the measures includes extending the maximum term of home loans to 40 years, with banks actively promoting this policy. However, potential homebuyers remain cautious and adopt a wait-and-see approach.
According to a report by “Financial First” on September 9, many regions have rolled out new housing policies. Provinces such as Hainan, Chengdu, and Xi’an are expanding the scope of public housing fund utilization.
In Chengdu, the minimum down payment ratio for applying for a public housing fund loan for buying new homes has been reduced from 20% to 15%. They have also introduced a subsidy for loan interest where they subsidize 20% of the actual loan interest incurred each month, with a cumulative subsidy limit of 25,000 yuan. Additionally, for eligible new home purchases, the loan amount for public housing fund loans can be increased by 20% on top of the current maximum loan amount.
Regions like Henan, Wuhan, and Haikou have implemented various combination policies to lower the threshold for home purchases, provide subsidies, and control the housing stock increment.
Henan province introduced 15 new housing policies on September 8. Apart from offering housing subsidies, interest rate subsidies on loans, optimizing the unit determination method, supporting the acquisition of existing commercial properties, and expanding the scope of public housing fund utilization, they have also proposed measures such as suspending land supply for counties and cities with a housing inventory clearance period of over 18 months, implementing a “people-oriented” approach in determining housing needs, controlling pre-sale of commercial properties, enhancing pre-sale thresholds, and promoting existing property sales.
Multiple government departments, including the Ministry of Housing and Urban-Rural Development, released several documents at the end of August encouraging the use of existing property sales. New home buyers will now be allowed to obtain home loans with a maximum term of 40 years, exceeding the previous limit of 30 years. Commercial banks are also encouraged to provide operational property loans with a maximum term of 15 years in an effort to turn the market around.
In 1997, the Chinese government set the maximum term for individual housing loans at 20 years, which was extended to 30 years in 1999 and now further extended to 40 years.
According to a report by “China Real Estate News” on September 9, a senior official at a state-owned bank in Beijing mentioned, “Currently, there is a lot of inquiries from post-95s, and some new loan applicants are choosing the maximum 40-year term.”
The bank applies the standard of “the age of the homebuyer + loan term and the age of the property + loan term should not exceed 85 years.” Once all the loan documents are complete, the approval process is typically completed within 1 to 3 working days.
Banking professionals and real estate agencies in cities like Shanghai, Shenzhen, Guangzhou, and Hangzhou have stated that the application for 40-year home loans has been implemented in many regions but at varying paces. The extension of existing property loan terms is still in the stage of system adjustments and detailed rules drafting, lacking a unified operational standard.
Among these cities, Shanghai has the most detailed regulations regarding the 40-year home loan policy. The Bank of Communications Shanghai Branch explicitly supports the extension of existing property loans, where the original 30-year loans can be extended to 40 years and 20-year loans can be extended by up to 10 years. Regarding new home loans, different banks have varying risk control standards, such as Construction Bank and Bank of Communications implementing an age + term limit not exceeding 75 years and 70 years, respectively. Only individuals under 35 years old can apply for a full 40-year loan. Meanwhile, some branches of banks like China Merchants Bank and Industrial and Commercial Bank are following a standard not exceeding 80 years, allowing homebuyers under 40 years old to apply for a 40-year loan.
A personal loan manager at a Shanghai joint-stock bank mentioned that those born before 1991 may not qualify for a full 40-year loan. The specific age and tenure limits differ among banks and even among branches, so it is necessary to communicate with the handling bank to confirm. However, since the policies are newly implemented and the specific rules are not yet fully tightened, there is still room for negotiation between customers and banks.
The Industrial and Commercial Bank’s app also introduces methods for extending existing property loan terms, stating that personal housing loans disbursed before the new rules are implemented will continue to be executed according to the original contract and provisions. The bank will not proactively adjust the terms. If customers wish to extend the loan term, they can contact the handling bank and submit an application. The bank will determine the maximum term based on the customer’s reasons for the extension, future repayment sources, and arrangements. Following the new regulations, the bank internally reviews the extension request, and if approved, the loan term can be extended up to 40 years. However, the extended term should not exceed half of the original loan term.
Nevertheless, there is widespread skepticism and a cautious attitude among the public, as the restriction on new 40-year home loans for individuals over 35 years old has sparked public debate.
One homebuyer admitted, “If you choose a 40-year loan term, buying a house at 25 and paying off until 65, your entire career will be tied to the house, and you’ll have to repay an additional 200,000 yuan. I don’t think it’s worthwhile.”
The homebuyer explained that for a 1-million-yuan loan at a 3% annual interest rate under equal monthly installment payments, the monthly installment for a 30-year term would be 4,216.04 yuan, with a total interest of 518,000 yuan. Extending the term to 40 years would reduce the monthly installment to 3,581.02 yuan, saving 635 yuan per month, but the total interest would increase to 718,000 yuan, paying an additional 200,000 yuan. While monthly payments are reduced, the overall interest cost significantly rises over the entire period.
Tian Lihui, a finance professor at Nankai University, stated in mainland media interviews that extending the home loan term can lower the entry threshold for buying a house but essentially results in postponing repayment pressure, significantly increasing long-term interest costs. For banks, extending loan duration amplifies interest rate and credit risks. Homebuyers should make rational decisions based on their long-term income expectations and avoid blindly extending loan terms.