Hong Kong
CNN
—
The property market in China has been so depressed that some banks have resorted to drastic measures, including allowing people to pay off their mortgages until they turn 95.
Some banks in the cities of Nanning, Hangzhou, Ningbo and Beijing have extended the upper age limit on mortgages to between 80 and 95, according to several state media reports. . That means people in their 70s can now take out loans with maturities ranging from 10 to 25 years.
China’s real estate market is in phase historical recession. New home prices fell for the 16th straight month through December. Sales by the country’s top 100 developers last year were only 60% of what they were in 2021.
The new age limit, not yet an official national policy, aims to breathe life into the market, said Yan Yuejin, a property analyst at E-House China Holdings, a real estate company. The country’s dwindling real estate while considering China’s rapidly aging population. service company, in a recent research note.
“It’s essentially a policy tool to stimulate housing demand, as it can ease the debt payment burden and encourage home purchases,” he added.
The new mortgage terms are like a “transitional loan”. If older borrowers are unable to repay their loans, their children must continue to mortgage, he said.
Last month, China reported that population decrease in 2022 for the first time in more than 60 years, a new milestone in the country’s deepening demographic crisis with significant implications for the country’s slowing economy. The number of people aged 60 and over rose to 280 million at the end of last year, accounting for 19.8% of the population.
The age of the mortgage borrower plus the mortgage term should not normally exceed 70 years old, according to previous rules published by the banking regulator. The average life expectancy in China is about 78.
The China Banking and Insurance Regulatory Commission did not publicly comment on the new terms.
But bank branches across the country are setting their own terms for these multigenerational loans.
According to the Beijing News, a branch of the Bank of Communications in the city said borrowers in their 70s can take out 25-year home loans, which means the upper age limit for with mortgages raised to 95.
But there are also prerequisites: The mortgage needs to be secured by the borrower’s children, and their gross monthly income must be at least twice the monthly mortgage payment.
Separately, a branch of Citic Bank extended the upper age limit on its mortgages to 80, the paper said, citing a bank’s chief customer officer.
Calls to the Beijing branches of Citic Bank and Bank of Communications went unanswered.
Hong Hao, chief economist at Grow Investment Group, said it was a “drastic” measure and “could be a marketing gimmick to attract paying elderly people”. [mortgages] for the younger generation.”
Yan from E-House said the main beneficiaries of the move may not be the elderly, but rather middle-aged borrowers between 40 and 59. During the extended payment period, those people can Mortgage is possible for 30 years – the maximum period allowed in China.
Compared to previous terms, that means those borrowers can pay less each month.
“It’s clearly a way to ease the debt payment burden,” Hong said.
According to E-House calculations, if a bank extended the upper age limit to 80, borrowers aged 40 to 59 could get 10 more years on their mortgage. Assuming their mortgage is one million yuan ($145,416), their monthly payment could drop by 1,281 yuan ($186), or 21%.
Chinese households have become reluctant to buy new homes in the past year, as the now-expired Covid-19 situation, falling house prices and rising unemployment have discouraged buyers. Last summer, the protests that broke out in dozens of cities staged by people refusing to pay mortgages on unfinished homes, dealing another blow to market sentiment.
Authorities have launched a series of stimulus measures to try to revive the housing market, including Many cuts in loan interest rates And measure to ease a liquidity crunch for developers — so they can resume stalled construction and deliver pre-sold homes to buyers as quickly as possible.
In addition to Beijing, several banks in Nanning, the capital of Guangxi province, have raised the upper age limit on mortgages to 80, according to the city’s official newspaper. Nam Quoc Tao Bao.
In the eastern cities of Ningbo and Hangzhou, some local lenders are advertising age limits of 75 or 80, a relaxation from previous regulations, the company reported. government ownership. Ningbo daily newspaper And Hangzhou Daily.
“If the applicant is too old to meet the loan requirements, they can have their children act as guarantors,” said one lender.
But Wang Yuchen, a real estate lawyer at Beijing Jinsu Law Firm, warned such mortgages were “risky”.
It is understandable that many cities are trying to revive their housing market by reducing their monthly debt and attracting more older people into the homebuyer pool, he said in a commentary on his WeChat account. mine.
“But the elderly have relatively poor debt repayment capacity. On the one hand, it can affect their quality of life in old age, as they continue to carry their mortgage debt and work for the bank until the last moment of their life,” he said. “On the other hand, the risks involved could be passed on to their children, increasing their financial pressure.”
“For some homebuyers, choosing this way to buy a home is probably because they lack money. But doing so at this time is very risky,” he said, adding that the property market is in a structural recession and the government is still working to curb speculation. .
