China Extends Home Loan Tenure to 40 Years to Boost Developers' Funding
Macro Impact 4
China announced additional measures to support its property market, which has been sluggish for five years. The central bank now allows homebuyers to take out mortgages for up to 40 years, up from 30 years, and the securities regulator will support property developers in raising funds through equity and bond issuances. These measures, announced on Friday (August 28), also include promoting the sale of completed homes instead of off-plan sales, which would reduce the risk of delivery defaults, and allowing developers to pay for land in installments to ease cash flow pressures. While each measure may not be sufficient to end a crisis that has led to about $130 billion in debt defaults, Zhang Zhiwei, chief economist at Pinpoint Asset Management, said the measures are stronger than the market expected and represent a significant step in the right direction. Amid signs of a weakening Chinese economy in July, Premier Li Qiang has called for increased support measures.
