A mortgage at 80yo: China’s radical shift to boost crippled property market

China is offering mortgages to borrowers who would be 80 years old by the time it is paid off as lenders scramble to prop up the country’s housing market following strict zero-Covid restrictions.

Several lenders across the country have extended their borrowing age in a bid to stimulate growth after property investment slumped by 10 per cent last year, the first drop since 1999. Sales of residential property fell by 14 per cent in January compared with a year earlier, according to data from 40 major cities compiled by China Real Estate Information.

The age limit has increased from an average of 65 to 70 years to one of the highest in the world – the UK in comparison has a typical maximum age of between 65 and 70 years.

For example, a 50-year-old home buyer can now get a 30-year mortgage. Under the previous rules, the buyer would have had to be under 40 to get a similar mortgage.

It comes after Xi Jinping loosened the country’s zero-Covid restrictions for the first time since the pandemic hit following nationwide riots in protest over the rules.

Bruce Pang, chief economist, Greater China at JLL, a real estate services company, said: “We think this is one of Chinese banks’ latest moves to revive the hard-hit property market, with tailor-made terms and creative solutions to attract more mortgage-seekers.

“Chinese leaders have reiterated that the property industry remains a ‘pillar’ of the economy. And we think the Chinese government will continue to implement measures to stabilise the property market, to improve expectations, to ensure the delivery of residential buildings, and to meet the reasonable financing needs of property developers.”

Evergrande Group, one of China’s largest property developers, has been at the centre of the country’s property crisis owing over $US300 billion ($436 billion) in loans. Analysts at UBS estimate that China’s real estate slump will cost the nation’s banking system as much as $212 billion in losses on loans, bonds and other assets.