China Extends Mortgages To 40 Years, But Homebuyers Remain Reluctant To Borrow

Authored by Michael Zhuang via The Epoch Times,

China’s decision to extend the maximum term for individual home mortgages from 30 years to 40 years has received a lukewarm response from homebuyers.

Several major Chinese banks moved quickly to offer 40-year mortgages after the policy took effect, with some advertising approval times as short as 15 minutes. However, Chinese media reports indicate that relatively few prospective buyers are opting for the longer loans.

The policy change, announced jointly by the People’s Bank of China (PBOC) and China’s National Financial Regulatory Administration on Aug. 28, allows individual home mortgages to run for up to 40 years, according to Chinese state media Xinhua News Agency.

The PBOC said the longer term would give borrowers and lenders greater flexibility and help promote a “virtuous cycle” between finance and the property sector.

However, the longer repayment period has done little to change a broader shift in household behavior. Chinese consumers are still reluctant to take on additional debt and are instead seeking to reduce their existing liabilities.

Households Pull Back From Debt

Chinese news portal Sina reported on Sept. 20 that banks had been actively promoting the new mortgage option, but prospective buyers remained cautious.

A report by the Chinese media outlet China Times, via Sina, attributed the weak demand to households’ growing reluctance to take on debt as China’s economy slows.

PBOC data showed that household loans fell by 1.03 trillion yuan ($150 billion) during the first eight months of 2026, according to state-run mouthpiece Xinhua.

The slowdown is particularly pronounced in longer-term household borrowing, which includes mortgages. Such loans increased by 1.17 trillion yuan ($33 billion) during the first half of 2026, according to data from China’s Ministry of Commerce.

Another sign of the shift came in April, when repayments of long-term household loans exceeded new loans issued that month. The scale of early repayments reached a record high.

Chinese media Securities Times, in a report carried by Sina, described the trend as Chinese households collectively seeking to “quit” mortgages.

Mike Li, a U.S.-based investment consultant and China expert, told The Epoch Times that the longer mortgage terms do not address the underlying financial pressure facing households.

“The regime is trying to ease borrowers’ economic pressure by extending the repayment period, but the pressure is only being postponed and has not actually been reduced,” Li said.

The reluctance to take on mortgages comes as China’s housing market remains in a prolonged downturn.

Falling home prices create an additional obstacle for households considering a long-term mortgage. Buyers taking on large mortgages face the risk that their homes’ values could decline while their outstanding debt remains high.

Li said this could also create risks for banks if borrowers begin to default.

“If a default occurs, when banks dispose of the property, they may face a decline in the property’s value, insufficient collateral, increased disposal costs, and a lower recovery rate,” he said.

Li said the broader policy response had so far failed to reverse the weakness in the property market or revive consumption.

“The policies introduced by the Chinese Communist Party so far have had very little effect. The property market has not been rescued, and consumption has not improved,” he said.

Jon Sun contributed to this report.