China Eases Mortgage and Developer Lending Rules in Broad Property Policy Package

China's central bank, the National Financial Regulatory Administration and China's securities regulator on August 28 rolled out a broad package of property-market measures covering developer loans, personal mortgages, commercial real estate lending, urban renewal project loans and real estate trust business, according to Jiemian News. The most closely watched change is in the trial personal mortgage rules: the maximum loan tenor for commercial home purchases was extended from 30 years to 40 years, while the cap on total debt-service-to-income ratio was raised from 55% to 60%. The new developer-loan rules require a lead bank system and say loan maturities should match project construction and sales cycles. For presale projects, loan terms are generally capped at three years and cannot exceed five years; for projects sold as completed homes, the general cap is five years and the maximum is seven years; loans for commercial property development are generally capped at seven years. The first principal repayment is generally due only after project completion filing, though early repayment can be agreed. China's securities regulator also issued an opinion supporting the property sector's new development model, allowing listed developers to raise funds through private placements and private convertible bonds, use shares, private convertible bonds or cash to acquire property-related assets, and issue new corporate bonds for eligible projects. It also encouraged CMBS, real estate ABS and REITs, and said it will keep advancing the pilot program for private real estate investment funds.