China’s central bank and financial regulator jointly released a landmark policy package on Friday that fundamentally rewrites the rules for real estate lending, in the biggest shake-up of property finance in two decades.
The document, titled Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Building of a New Model for Real Estate Development, was issued by the People’s Bank of China (PBOC) and the National Financial Regulatory Administration (NFRA). It follows the government’s broader push to phase out presales of unfinished apartments — a system long blamed for widespread defaults and “zombie projects.”
Here are the key takeaways from the new framework.
Core Reform: One Project, One Lead Bank
The most significant change is the introduction of a “lead bank system” for development loans. Under the new rules:
- Each real estate project must have a single lead bank (or a syndicate led by one bank) that manages all project-related funds.
- All capital flows — including development loans, equity contributions, and sales proceeds — must be deposited into a unified account at the lead bank.
- Presale proceeds and down-payment accounts must also be opened with the same lead bank.
- The developer must notify the lead bank before taking on any external debt or making major financial decisions.
This closed-loop fund management is designed to prevent developers from diverting homebuyer deposits and loan proceeds to other projects or corporate expenses — a practice that has been a primary cause of unfinished housing.
Loan Tenors Extended to Match Construction Cycles
Development loan tenors will now be aligned with actual construction timelines:
| Project Type | Standard Term | Maximum Term |
|---|---|---|
| Presale projects | Up to 3 years | 5 years |
| Completed-home sale projects | Up to 5 years | 7 years |
| Commercial real estate | — | 7 years |
Crucially, the first principal repayment date is set after the project receives its completion certificate, giving developers breathing room during construction.
Homebuyer Loans: No More Paying Before You Get the Keys
One of the most consumer-friendly changes concerns personal housing loans:
- For completed homes sold as ready-to-move-in, the mortgage can only be disbursed after the sale is registered.
- For presale homes, the mortgage is released only after the entire project has passed completion inspection.
Loans must be paid directly via trustee transfer to the project’s designated account, not to the developer’s general account.
This eliminates the long-standing pain point where buyers began repaying mortgages while their homes were still under construction — sometimes never completed.
Mortgage Terms Extended to 40 Years
In a move that could significantly reduce monthly payments, the maximum term for individual housing loans has been extended from 30 years to 40 years. Borrowers and banks can negotiate the exact duration, but the longer ceiling gives more flexibility, especially for first-time buyers facing high prices relative to incomes.
Debt Relief for Distressed Borrowers
Banks are now explicitly allowed to restructure existing mortgages for borrowers who have temporarily lost income due to unemployment, illness, or other hardship. Options include extending the loan period, deferring principal payments, or granting payment holidays — all subject to negotiation between lender and borrower.
Macroprudential Framework Strengthened
A new chapter on macroprudential management introduces:
- A counter-cyclical adjustment mechanism for real estate credit
- Unified minimum down-payment ratios, interest rate floors, and concentration limits
- Comprehensive statistical monitoring covering loans, bonds, stocks, trusts, and offshore financing
The PBOC and NFRA also reserve the right to create entirely new loan categories in the future, signaling that this reform is designed to evolve.
Market Implications
For homebuyers: The combination of post-completion mortgage disbursement and extended loan terms offers stronger legal protection and lower near-term financial pressure. Trust in presale purchases should improve.
For developers: Access to funding becomes more predictable but less flexible. The era of using presale cash to cover other projects is over. Well-capitalized, compliant builders will benefit; highly leveraged operators face tighter liquidity.
For banks: Lead banks shoulder greater supervisory responsibility. The shift to longer-tenor development loans (up to 7 years) increases capital lock-up, requiring better risk pricing. Meanwhile, 40-year mortgages introduce new cross-cycle credit risks.
For the market overall: The reforms provide the financial infrastructure for China’s transition from a “high-speed presale model” to a “full-lifecycle operation model,” encompassing rental housing, affordable housing, commercial real estate, and urban renewal.