What changed
China has launched its first national interest subsidy for individual home loans. From 1 October 2026, qualifying buyers of first homes can receive a 1-percentage-point annual subsidy on up to 1 million yuan of new commercial mortgage lending, for as long as five years.
To qualify, the home must:
- Be a first home bought with a newly issued commercial mortgage
- Cover no more than 120 square metres
- Cost no more than 1.5 million yuan
The subsidy is automatic after the borrower authorises the bank. It is deducted from monthly repayments. The central government covers 90% of the cost and local governments cover 10%. The programme is provisionally set to run for one year.
Why it matters
The policy is aimed at the most ordinary end of China’s housing market: smaller, cheaper first homes and the households trying to buy them. It does not apply to existing loans being refinanced, and it cannot be combined with support already available for provident-fund mortgages or subsidised housing.
The savings are meaningful but bounded. On a 1 million yuan, 30-year loan at a 3.05% interest rate, the reported five-year saving is about 46,000 yuan. The maximum is described as nearly 50,000 yuan because the loan balance falls over time, so the subsidy shrinks each year.
The design also puts banks at the centre of delivery. All commercial mortgage lenders can handle the subsidy, and banks must check eligibility before deducting the amount. The six largest state-owned banks said on 30 September that they were preparing the service and warned that borrowers should pay no fee. No third-party agent is authorised.
The immediate effect for an eligible buyer is simpler arithmetic: a lower monthly mortgage bill without a separate application. The larger effect is still uncertain. The programme’s reach, total fiscal cost and impact on housing demand and prices are not yet known.
Comments
No comments yet.