40-Year Commercial Mortgage Launched: Pre-Approval in 15 Minutes, but Most Borrowers Can't Get Full Term

Source: Huaxia Times

As of early September, multiple city commercial banks, rural commercial banks, and major state-owned banks in China have begun accepting applications for 40-year commercial mortgages, supported by online pre-approval systems to improve lending efficiency.

However, a survey by reporters reveals that only pure commercial loans currently qualify for the maximum 40-year term. Housing provident fund loans and combined loans have yet to issue supporting implementation rules. Meanwhile, banks have imposed strict approval criteria regarding age, credit history, income, and property age, making it difficult for most homebuyers to secure the full extended term.

Market demand is also clearly divided. New homebuyers remain cautious about ultra-long-term loans, while existing homeowners show a stronger desire to reduce monthly payments and ease financial pressure. Many buyers are opting for a "long-term loan with early repayment" strategy.

Industry experts believe that the 40-year mortgage represents a systemic restructuring of the real estate credit system. While it can ease short-term homeownership pressure, it also extends the debt cycle and increases long-term interest costs. It is unlikely to fundamentally reverse the current slowdown in the mortgage market, and buyers are advised to weigh the pros and cons rationally.

High Barriers to Access for 40-Year Commercial Loans

Following the implementation of new mortgage policies on August 28, several domestic banks have begun accepting applications for commercial housing loans with a maximum term of 40 years.

By early September, banks including Bank of Nanjing (Hangzhou Branch), Postal Savings Bank of China (Jiangsu Branch), Bank of Changsha, Hankou Bank, and various rural commercial banks had issued public announcements via official WeChat accounts, confirming that newly issued mortgages could extend up to 40 years. Some banks have also launched online pre-approval and fast-track services. For example, the Jiangsu branch of Postal Savings Bank of China can complete online pre-approval in as little as 15 minutes, while Bank of Nanjing's Hangzhou branch offers 3-minute pre-approval and 24-hour processing, significantly improving mortgage efficiency.

Despite the seemingly relaxed loan term adjustment, multiple hidden thresholds remain. Not all homebuyers can successfully secure a full 40-year loan. A reporter visiting a state-owned bank branch in Beijing's Fengtai District learned that the current approval standard requires "the borrower's age plus the loan term not to exceed 85 years." This means only younger first-time buyers under 45 are eligible for the full 40-year term.

A Beijing real estate agent confirmed, "Currently, buyers born after 1991 have a higher approval rate for 40-year mortgages. Those born before 1991 generally cannot obtain the maximum term."

In addition to age restrictions, banks also review credit records, income stability, employment history, property age, and building structure, maintaining a cautious approval process.

Regarding existing mortgage extensions, policies vary by bank. According to a staff member at a state-owned bank, existing mortgages cannot be automatically extended. Borrowers must submit applications in person with property deeds, income certificates, and property verification documents. If approved, a new loan contract must be signed. The bank also stipulates that the extension period cannot exceed half of the original loan term, making it difficult for most short-term existing mortgages to be extended to 40 years. In some regions, banks have clarified that the new policy applies only to new commercial mortgages, while existing loans remain under original contracts.

Notably, housing provident fund loans and combined commercial-provident fund loans have not yet adopted the 40-year policy.

The real estate agent added, "Currently, only pure commercial loans can be processed for 40-year terms. China Construction Bank has already implemented this, and other banks will follow. But the provident fund has no supporting rules yet, and combined loans cannot enjoy the 40-year maximum."

The agent further explained that after consulting with provident fund center staff, the loan term for provident fund loans remains unchanged, with no policy notice extending it to 40 years. "Provident fund loans are limited by retirement age. Most buyers are nearing retirement and cannot apply for ultra-long-term loans anyway. Even if the policy were relaxed, practical application would be extremely limited." The agent noted that for ordinary buyers, the advantage of provident fund loans lies in lower interest rates and greater stability. Although they cannot be extended to 40 years, the overall cost is lower.

Balancing Monthly Payment Relief with Long-Term Interest Costs

Faced with the trade-off between lower monthly payments and higher total interest, many homebuyers are adopting a "long-term loan with early repayment" strategy.

Ms. Li, an employee of a state-owned enterprise in Zhejiang, shared her perspective with Huaxia Times: "Most families don't pay off a 30-year mortgage in full. They usually settle it in 15 to 20 years. If I choose a 40-year mortgage, my early monthly payments drop significantly. Later, when I have more funds, I can repay early. The total cost difference is small, and it eases my daily cash flow."

Other buyers remain cautiously观望. Mr. Zhang, a first-time homebuyer in Beijing, said extending the loan term not only increases interest costs but also reduces future quality of life and opportunity cost of capital. "If the saved monthly payments cannot generate returns higher than the mortgage interest, extending the term is pure cost waste. You can't just focus on short-term relief and ignore long-term risks."

According to Tian Lihui, a finance professor at Nankai University, the core contradiction of ultra-long-term mortgages is that they lower the immediate threshold for homeownership but shift repayment pressure into a long-term burden spanning decades. "If a 30-year-old chooses a 40-year term, repayment will continue until age 70, meaning they will need to use pension income to repay the mortgage, limiting cash flow in retirement. Additionally, over a 40-year repayment period, uncertainties such as interest rate fluctuations, income changes, and family emergencies significantly increase, making long-term debt risks impossible to ignore." He reminded buyers that 40 years is the maximum loan term, not the default option, and decisions should be made carefully based on income expectations.

The real estate agent also provided a practical calculation: For a loan of 1 million yuan at an annual interest rate of 3%, with equal principal and interest repayment, the monthly payment for a 40-year mortgage is about 3,580 yuan, compared to 4,216 yuan for a 30-year term—a reduction of 636 yuan per month, or over 15%. However, the long-term cost increases significantly. The total repayment for a 40-year loan is approximately 1.71 million yuan, about 200,000 yuan more in interest than a 30-year loan.

"For first-time buyers with tight cash flow and high monthly payment pressure, a 40-year commercial loan can be a good choice. They can repay early when funds become available, balancing short-term pressure and long-term costs. For buyers with stable income and no repayment pressure, a 30-year commercial loan or provident fund loan is more cost-effective," the agent said.

Market Trends and Expert Insights

Industry data shows a general slowdown in the mortgage market. According to the 2026 Q2 Loan Allocation Report released by the People's Bank of China, as of the end of the second quarter of 2026, the national balance of individual housing loans stood at 36.29 trillion yuan, down 3.8% year-on-year, with a decrease of 716.3 billion yuan in the first half of the year.

Tian Lihui analyzed that for banks, extending the mortgage term from 30 to 40 years will exacerbate the mismatch between asset-side and liability-side deposit maturities, widening both interest rate risk and credit risk exposure. In his view, extending the term can lower monthly payments and release some marginal demand, "but the fundamental driver of the mortgage market is residents' income expectations and housing price trends. If these two factors do not improve substantially, simply loosening the term will not reverse the trend. The 40-year mortgage is more of an institutional reserve tool than a short-term stimulus."