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China’s trying to revive its battered real-estate market, which has been in a slump amid strict COVID restrictions.
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Some banks in China are now extending the upper age limit for mortgage borrowers to 80.
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Banks in cities like Beijing, Nanning, and Ningbo have raised the upper age cap.
China’s trying to revive its battered real-estate market — and it’s now looking at more “creative” solutions.
To attract more mortgage-seekers, some banks are starting to extend the upper age limit for homeowners servicing mortgages to 80 years old, according to various local media outlets. The upper age limit is typically 65 to 70 now, according to news outlet Sixth Tone.
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.
Banks have extended the upper age cap for mortgages in cities like Beijing and Nanning, the Beijing Youth Daily reported on February 14.
The upper age limit for those seeking a mortgage has also been increased to 80 by some banks in Ningbo, a major industrial hub in east China’s Zhejiang province, per a Tuesday report in the Ningbo Evening News.
This has sparked an online debate about whether such policies would lessen the burden for homebuyers in an aging society. Questions about what would happen if a mortgage borrower dies before he or she can redeem the loan are also being asked. The measures are also taking place amid recent speculation that China may be raising its retirement age.
In comparison, there’s no upper age limit in the US for mortgage applicants as it’s prohibited under the Equal Credit Opportunity Act. However, lenders may look at age-related factors such as changes in income as borrowers near retirement.
The policy has to be ‘creative’ when the buyers are not responding to easing measures
China’s property market has been in a slump recently, due to three years of strict COVID-19 restrictions that only just ended.
Earlier in February, the International Monetary Fund said in its annual review of China’s economy that the real estate crisis “remains unresolved” and that the country’s growth remains “under pressure.” On top of that, more than half of 60 mainland China-listed developers are likely to post losses for the fiscal year 2022, per Bloomberg calculations on February 6 using public data.
Investment into China’s property fell by about 10% in 2022 compared to a year ago, according to official data released on January 17. Sales continued to be weak in January 2023, with residential property sales by area falling 14% from the same period in 2022, according to data from 40 major cities compiled by China Real Estate Information.
Tommy Xie, the head of Greater China research and strategy at Singapore-based OCBC Bank, wrote in a Tuesday LinkedIn post the news is “quite eye-catching,” adding: “Policy has to be creative when the buyers/investors are not responding to easing measures.”
Read the original article on Business Insider