Beijing bans mortgage advances until housing projects finish, overhauls pre-sale system

On Friday, Chinese regulators unveiled a package of policies intended to end the reliance of developers on funds collected from buyers before projects are built. Under the new rules issued by the People’s Bank of China and the National Financial Regulatory Administration, a mortgage can be granted only after a housing project reaches completion, and each project must have a designated lead bank to monitor and provide financing.

Local governments are instructed to push the sale of finished homes to “fundamentally prevent delivery risks,” according to state media. The reforms also lengthen the longest mortgage term from 30 to 40 years and urge financial institutions to meet developers’ reasonable financing needs while treating private and state-owned firms equally. Analysts such as Zhang Dawei of Centaline Property and Zhiwei Zhang of Pinpoint Asset Management say the changes aim to restore confidence but will likely benefit larger, liquid developers, leaving smaller players vulnerable. The property sector, still in a deep slump after a 2021 market crash and defaults by firms like China Evergrande, continues to drag on the economy.