A borrower in Shenzhen, identified as Li Jie, recently discovered he could independently adjust his monthly mortgage payments through the China Construction Bank (CCB) app, with an adjustment period lasting up to 24 months. During this period, he is required to pay the current interest in full each month and repay a principal amount of no less than 1 yuan. Li Jie immediately submitted an application through the mobile app. Although the loan principal and interest continue to accrue normally during the reduced payment period, with no suspension or waiver of interest, and the deferred principal must eventually be repaid with higher monthly payments after the two-year adjustment period ends, he believes that if the application is approved, his monthly payment pressure will at least be temporarily alleviated over the next two years.

This business of extending mortgage repayments is widely interpreted as a move by CCB to implement the new 40-year mortgage policy. However, when a reporter from this publication called a Beijing branch of CCB's consumer credit center as a customer, the staff responded that this service was a financial relief tool that the bank had previously introduced. As for the 40-year mortgage business itself, the specific implementation details have not yet been officially issued, and further notice is required. On the same day, inquiries were also made by phone, again as customers, to credit managers at several other major state-owned banks in Beijing about whether a 40-year personal housing loan could currently be applied for. The general response was that it was possible to apply, but the specific procedures still awaited detailed regulations. Regarding whether borrowers need to meet specific age requirements, current policies vary among banks. Some bank credit staff indicated that the previously implemented age limits may be relaxed, while others have clearly stated that borrowers applying for 40-year mortgages should not exceed 35 or 40 years old.

Policy Issued, Details Pending

On August 28th, multiple government departments including the Ministry of Housing and Urban-Rural Development, the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission issued a series of policy measures to accelerate the establishment of a new development model for the real estate sector. This marks a comprehensive optimization and upgrade of China's real estate credit system that has been in place for over two decades. Among these measures, the People's Bank of China and the National Financial Regulatory Administration jointly issued the "Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Construction of a New Real Estate Development Model" (hereafter referred to as the "Opinions"). The "Opinions" clearly specify that the maximum term for personal housing loans shall not exceed 40 years, whereas the previous market standard was generally 30 years. Furthermore, the loan amount must not exceed the appraised value of the property being purchased. Loans with a term of one year or less are to be repaid with a lump sum of principal and interest at maturity or through monthly payments of principal and interest; loans with a term exceeding one year are to be repaid monthly.

A survey of financial institutions in Beijing following the policy's release shows that most institutions are still awaiting the operational details from the municipal government, with many in a state of having clear policy but pending rules. A credit staff member from one major state-owned bank estimated that specific operational guidelines might be issued within a week or two. Another credit manager mentioned that their meetings have clearly indicated that 40-year mortgages can be processed and that corresponding extensions can be made for existing mortgages. However, the specific operations still await the implementation details, but they offered to pre-register customer information and contact them once the details are formulated.

The age restrictions for borrowers under the 40-year mortgage policy have become a hot topic. Banks have differing perspectives, generally referencing the formula of borrower age plus loan term being less than or equal to the bank's loan age limit. An Agricultural Bank of China (ABC) credit manager stated that the combined age and loan term should not exceed 80, meaning applicants for a 40-year loan should not be older than 40. Conversely, a Bank of Communications (BOCOM) manager indicated that the total should not exceed 75, capping the borrower's age at 35 for a 40-year loan. Under current regulations, the age limit at ICBC and CCB is 65, which, by the common formula, would restrict loan applicants to 25 years old or younger. A CCB staff member acknowledged that with the new maximum loan term, the previous restrictions on property age and borrower age may be unsuitable, and hence the operational details are necessary to potentially relax these conditions. A credit manager from Bank of China (BOC) also noted that with increased life expectancy, the current age limit for mortgage borrowers might be relaxed in the future.

A Beijing real estate agent pointed out that buyers looking to improve their housing conditions are typically between 35 and 50 years old. If banks strictly enforce property and age thresholds, this demographic might not benefit from the new policy.

Reduced Monthly Payments, Higher Total Interest

The benefits of the new 40-year mortgage policy are clearly stratified among different borrower groups. The core beneficiaries for new loans are younger buyers, such as those from the post-90s and post-00s generations, whose incomes are in a growth phase. Extending the loan term helps them spread out monthly payments and lowers the barrier to entering the housing market. Additionally, if existing mortgages are allowed to be transferred or re-priced, earlier homebuyers could also see their monthly payments reduced. For instance, with a loan principal of 1 million yuan, a mortgage rate of 3%, and equal principal and interest repayment, a 30-year term would have monthly payments of about 4,216 yuan. Extending this to 40 years reduces the payment to approximately 3,580 yuan, saving about 636 yuan per month and 38,000 yuan in cash flow over the first five years.

Wang Hong, a post-90s homebuyer, highlights another side of this: although the monthly payment appears lower, a larger portion of the payment goes towards interest. Under the same calculation conditions, the total interest paid on a 40-year mortgage is over 200,000 yuan more than on a 30-year mortgage. In her view, extending the loan term increases the total interest burden. She expressed more enthusiasm for subsequent reductions in mortgage rates to achieve genuine repayment relief. Wang Hong, who bought her home in 2019 when prices were high, is also a beneficiary of lowered rates on existing mortgages. Driven by multiple cuts in the Loan Prime Rate (LPR), her mortgage rate has decreased from an initial 5.4% to the current 3.2%, significantly reducing her interest burden. However, she notes that her rate is still 20 basis points higher than the current first-home mortgage rate in her city.

The "Opinions" also address the adjustment of rates on existing individual housing loans. Article 24 stipulates that for existing floating-rate personal housing loans, if the loan's interest rate deviates from the national average rate for new personal housing loans by a certain margin, the borrower can negotiate with the bank to change the contractual interest rate or apply for a new floating-rate loan to replace the existing one, with the method chosen by the borrower. The margin added to the changed or new loan rate is to be determined through negotiation between the bank and borrower and must not be lower than the lower limit for personal housing loan rate additions in the city at the time of the change or replacement. The new loan amount must not exceed the remaining principal of the original loan. In practice, several major state-owned banks have set this deviation margin at 30 basis points. Based on data from the People's Bank of China, the weighted average rate for new commercial personal housing loans nationwide in the second quarter was 3.06%. This means that borrowers with existing mortgage rates above 3.36% can negotiate changes with their lending banks.

To alleviate short-term repayment pressure, several major state-owned banks have introduced relief policies for existing mortgages, allowing borrowers to temporarily suspend repayment of principal and interest. A borrower in Shenzhen shared that in July, she successfully arranged to reduce her monthly mortgage payment with CCB. For the next two years, she only needs to pay the interest monthly and a token 1 yuan of principal, nearly halving her payment and greatly easing her financial strain. "The approval came through the same month I applied. I didn't need to prepare any proof documents; it was all done through the phone app, which was very convenient." Another borrower reported that they had adjusted their repayment plan with ABC last year for two years, during which they only needed to pay 5% of the original monthly payment. A BOC mortgage customer also mentioned that by negotiating with their manager, they deferred their mortgage payments by two years, paying just 15% of the original monthly amount during the buffer period.

These measures, however, are temporary stop-gaps. They do not eliminate the long-term repayment obligation. Loan extensions and reduced payments are short-term solutions that can help residents with long-term solvency avoid forced defaults due to temporary income fluctuations, thereby lowering mortgage default risk. In the medium to long term, though, the relief in monthly payments comes at the cost of higher total interest. Whether these measures genuinely reduce default probability depends on economic and income growth. Experts warn that the long-term increase in interest implies higher actual debt costs. If property prices stagnate or decline, negative equity combined with high interest could weaken willingness to repay and amplify rational default motives. This also raises concerns about moral hazard and adverse selection, as some borrowers without genuine difficulties might use the policy window to postpone payments and free up cash flow, indirectly expanding credit exposure. The key to risk control lies not in whether to provide relief, but in the precision of the relief measures. Recommendations include establishing differentiated access, directing resources towards those facing temporary shocks rather than those who are insolvent, and dynamically monitoring and periodically reviewing relief accounts to prevent short-term buffers from becoming long-term risks.

Assessment Report Impact of Extensions

Surveys have found that after the policy's implementation, existing mortgage holders are concerned not only about applying for extensions but also about potential negative impacts on their personal credit records. Legal experts explain that according to current credit supervision rules, applying for a mortgage extension under the condition of obtaining bank approval and signing a written extension agreement will not generate overdue bad credit records or directly create a default stain. However, this does not mean the credit report will be completely unaffected. After the new policy is implemented, banks will report credit information according to the adjusted repayment plan, and in some cases, special annotations for the corresponding business adjustments may appear. This is fundamentally different from a true overdue bad record.

A customer who previously applied for a mortgage extension at a major state-owned bank said that while the bank clearly stated it was not an overdue or default event, his credit report later showed the annotation "due to the implementation of financial relief policies, the bank proactively postponed the repayment." This was confirmed by a credit manager from a major state-owned bank. This annotation made the customer feel his credit profile was "being watched."

In practice, these special transaction marks are visible to future financial institutions processing credit applications. Some banks' risk control departments may consider this record as a reference factor, potentially indirectly affecting future loan approvals. This is the source of the feeling that one's credit report is "being noticed." It's crucial for borrowers to understand that this annotation does not equate to a credit default. If they believe there are issues with the reporting, they can file a credit report objection with the bank. Simultaneously, borrowers should rationally view the relief policies. An extension is merely a tool to ease short-term pressure. Before applying, they should carefully assess their long-term repayment ability to avoid genuine defaults later.