Multiple Banks Roll Out 40-Year Mortgages: Monthly Payment Down 636 Yuan, Total Interest Up 200,000 Yuan

Source: Times Weekly

More than two weeks after China introduced a new policy extending the maximum term for personal housing loans to 40 years, multiple banks have accelerated the implementation of detailed rules, clarifying application procedures and stepping up promotional efforts.

Banks Announce 40-Year Mortgage Offerings

On September 17, the Hangzhou branch of Bank of Nanjing announced on its official WeChat platform that its maximum personal housing loan term has been extended to 40 years. The bank stated that approvals will be based on a comprehensive assessment of the borrower's age and income, helping applicants stretch repayment periods to lower monthly payments and ease financial pressure. Borrowers can apply online, with pre-approval in as fast as three minutes and full approval within 24 hours.

Since September 10, a number of major banks—including large state-owned banks and local city and rural commercial banks—have responded to the new policy, confirming they accept 40-year mortgage applications. The specific term is subject to negotiation between the buyer and the bank.

Not Everyone Qualifies: Age, Income, and Credit Still Key

However, sources from multiple banks told Times Finance that the 40-year term is not available to all applicants. Due to regional and institutional differences, no unified standard has been established for implementation. Banks will conduct rigorous, case-by-case reviews based on the borrower's age, employer, income, and credit history.

Market feedback suggests that homebuyers are not actively seeking 40-year mortgages. In contrast, demand for extending existing mortgages is far more urgent. Times Finance found that some banks have confirmed that the new policy also applies to existing loans, allowing borrowers to extend repayment periods to up to 40 years. Several borrowers reported that some major banks have already added an online application portal on their mobile banking apps, allowing extensions of up to 480 months for existing contracts.

Policy Background and Bank Responses

On August 28, the People's Bank of China and the National Financial Regulatory Administration jointly issued new credit rules, officially extending the maximum term for personal housing loans from 30 to 40 years. According to an incomplete tally by Times Finance, as of September 18, banks including Bank of Nanjing, Bank of Changsha, Postal Savings Bank of China, Hankou Bank, and several small and medium-sized rural commercial banks in Yunnan Province have issued notices on implementing the new policy.

The Jiangsu branch of Postal Savings Bank of China announced that its maximum personal housing loan term is now 40 years, with online application submission and pre-approval in as fast as 15 minutes.

According to the bank's repayment estimates, a 1 million yuan loan at an annual interest rate of 3%, repaid via equal principal and interest over 40 years, would require a monthly payment of approximately 3,580 yuan. This compares to 4,216 yuan per month over 30 years—a reduction of about 636 yuan, or roughly 15.1%. However, total interest costs increase significantly: the cumulative repayment over 40 years would be approximately 1.71 million yuan, compared to 1.51 million yuan over 30 years, an additional 200,000 yuan in interest.

Bank of Changsha also announced on its WeChat platform that it has fully implemented the 40-year maximum term policy, offering one-stop services from consultation to approval and disbursement. Hankou Bank stated that its maximum loan term is 40 years, with a loan-to-value ratio of up to 85%.

Implicit Barriers Remain; Young First-Time Buyers Benefit Most

Some state-owned banks have promoted the new policy in Guangzhou, but implicit thresholds remain. Young first-time homebuyers are the primary beneficiaries. For example, at a branch of Industrial and Commercial Bank of China (ICBC), borrowers must be no older than 45 to qualify for a full 40-year term. On September 17, Times Finance contacted an ICBC branch in Tianhe District, Guangzhou. A staff member said, "We just received the implementation细则 from headquarters today. We can now accept applications to extend mortgage terms to 40 years, but there is an age requirement: the borrower's age plus the loan term must not exceed 85 years."

Divergence on Existing Loans

Banks are taking different approaches to existing mortgages. Li Lin, a borrower from Anhui Province, told Times Finance that he found an "extend loan term" option on his ICBC mobile app. After selecting a reason, he could extend his loan by up to 480 months.

However, the ICBC staff member in Guangzhou explained that online applications are for reference only. Existing mortgages cannot be automatically extended; borrowers must apply in person and undergo manual review. "Borrowers need to bring income certificates, property deeds, and property registration records to the branch, fill out an application form, and submit a written explanation for the extension. After approval, the bank issues a contract amendment, and the borrower must sign a new agreement and re-register the mortgage."

ICBC also stipulates that the extension period cannot exceed half of the original loan term. This means that borrowers with short-term mortgages may find it very difficult to extend to 40 years.

Some banks have explicitly stated that existing loans are not covered by the new policy. The Gengma County Rural Credit Union in Yunnan announced that only new personal housing loans will follow the new rules; existing loans will continue under their original contracts.

Mixed Reactions: Lower Monthly Payments vs. Higher Total Interest

Despite the flurry of bank announcements, few customers have actually applied for 40-year mortgages. The ICBC staff member in Guangzhou admitted, "No one at our branch has applied yet. After all, total interest increases, and many customers are concerned about the cost."

Tian Lihui, Dean of the Institute of Financial Development at Nankai University, told Times Finance that while monthly payments drop by about 15%, total interest increases by roughly 200,000 yuan. He also noted that extending the credit risk cycle means borrowers may still be repaying loans after retirement, exposing them to long-term income uncertainty, property depreciation, and reduced financial safety nets.

"Extending the loan term to 40 years is essentially a demand-side support tool that 'trades time for space,' not a universal benefit," Tian said. "The core logic is to spread repayment pressure over a longer lifecycle, lower the monthly payment threshold to activate刚性 demand and upgrade demand, while stabilizing banks' mortgage asset scale."

Stronger Demand for Extending Existing Loans

Times Finance found that demand for extending existing mortgages is stronger than for new 40-year loans. However, some applicants' real motive is to "lower monthly payments and then prepay when possible." Li Lin, 29, is one such borrower. He took out a 1.09 million yuan loan in Hefei in early 2024 with a 30-year term. After the new policy was announced, he applied to extend his loan to 40 years and is awaiting approval.

"I had some investment losses recently, and our savings are gone. If I kept my previous spending level, things would be very tight each month. So when I saw this policy, I thought about lowering my monthly payment to free up more cash for living expenses and save faster, so I can prepay later," Li said.

This "long-term loan, early repayment" approach reflects residents' cautious attitude toward long-term debt. Yan Yuejin, Deputy Director of the Shanghai E-House Real Estate Research Institute, noted that 40 years is not a mandatory repayment period. Borrowers whose incomes improve can still optimize their debt through prepayment, offering ample flexibility in practice.

Impact on Banks' Mortgage Business

Amid strong deleveraging意愿 among residents, banks' personal housing loan business has been shrinking, with prepayment热潮 continuing and existing mortgages being significantly reduced. According to the People's Bank of China's Report on Loan投向 of Financial Institutions for Q2 2026, the national balance of personal housing loans stood at 36.29 trillion yuan at the end of Q2, down 3.8% year-on-year. For the six largest state-owned banks, the total mortgage balance was approximately 24.63 trillion yuan as of end-June 2026, a decrease of over 500 billion yuan from end-2025.

Personal housing loans were once considered among banks' highest-quality assets due to their long terms, relatively stable interest rates, and low non-performing loan ratios. Industry insiders believe the new policy could help boost banks' mortgage business to some extent.

Tian Lihui pointed out that for banks, extending loan terms will significantly increase per-customer interest income, slowing the decline in mortgage balances in the short term and reducing prepayment rates and default risk. However, risks also exist: short-term deposits funding ultra-long-term loans will exacerbate asset-liability duration mismatches, widening both interest rate risk and credit risk exposure.

He emphasized that the new policy's boost to banks' mortgage business is more about risk mitigation than scale expansion. "Until residents' income expectations and homebuying confidence are fundamentally restored, it will be difficult to reverse the overall trend of negative mortgage growth," Tian said.