China Eases Mortgage Rules, Extends Personal Home Loan Tenor To 40 Years

China's central bank and financial regulator on August 28 jointly issued new guidance to reform and improve real estate credit management, setting the maximum tenor for personal home loans at 40 years and capping loan amounts at the appraised value of the property, according to ETNet. For loans of one year or less, borrowers may repay principal and interest in a lump sum at maturity or make monthly repayments. For loans of more than one year, repayment must be made monthly. The People's Bank of China said extending the maximum tenor to 40 years gives both borrowers and lenders greater flexibility, with the specific term to be agreed between homebuyers and commercial banks. Shanghai E-House China R&D Institute deputy head Yan Yuejin said a RMB 1 million mortgage at 3% interest would see monthly payments fall from RMB 4,216.04 on a 30-year term to RMB 3,581.02 on a 40-year term, cutting monthly payments by RMB 635.02, or about 15%. The guidance also requires a lead bank system for property development loans, with one lead bank assigned to each project and all project funds placed under closed management at that bank.