China extends mortgage term to 40 years under new housing rules
Chinese regulations now require mortgage funds for pre-sold homes to be released only after project completion and safety certification, extending the maximum loan duration from 30 to 40 years.
China has introduced new finance rules to reduce risks associated with buying pre-sold homes. Under these regulations, mortgage funds will not be released until developers submit a project completion filing, confirming the building is safe and ready for occupancy rather than when the structure is merely finished. Consequently, the maximum mortgage term has been increased to 40 years, up from the previous 30-year limit. These measures aim to address past instances where buyers were left paying debts on homes that failed to be completed due to developer struggles.
Analysts note these reforms target buyer risk and certainty more than demand stimulation. Karl Choi, head of China property research at Bank of America, stated the primary goal is shifting towards a system where buyers have greater certainty about their purchases. He suggested future sales may increasingly occur after completion, ensuring 'what you see is what you get.' While the changes mitigate the risk of unfinished projects, experts argue that buyer hesitation stemming from falling prices and weak confidence remains a significant barrier to reviving the market.
