Three Ministries Announce Mortgage Interest Subsidy Policy: First-Home Buyers Eligible for Up to One Million Yuan in Subsidies
nashnova research
Starting October 1, China's Ministry of Finance and two co-regulators will subsidize first-home mortgages at 1 percentage point per year for up to 5 years, capped at RMB 1 million in loan principal. This means → Beijing is, for the first time, using direct fiscal subsidies on monthly payments to shore up the housing market — but only for the most basic owner-occupier demand.
Who qualifies — and how narrow is the gate?
Buyers must meet all three conditions: a newly issued commercial mortgage for a first home (new or resale; refinancing excluded); floor area ≤ 120 sqm; total price ≤ RMB 1.5 million.
This means → the policy draws a very tight box — it covers only "the most ordinary home + lower-income households." Upgraders and speculators are entirely shut out.
In plain terms = if your home exceeds 120 sqm or costs more than RMB 1.5 million, you get zero subsidy.
How much does this actually save?
The subsidy works as a 1-percentage-point annual interest-rate offset on the loan principal, lasting up to 5 years.
In plain terms = on a RMB 1 million mortgage, the government covers roughly RMB 10,000 in interest per year — up to about RMB 50,000 over the full five years.
The program is set for one year initially. This means → it is more of a time-limited nudge, designed to push fence-sitting first-home buyers into the market now.
Which cities benefit the most?
Tier-2 and tier-3 cities see far broader coverage. Mainstream first-home developments in central, western, and northeastern provincial capitals cluster at RMB 1–2 million, putting many units inside the policy threshold.
In tier-1 cities, prices are generally too high — the RMB 1.5 million cap effectively excludes most listings in Beijing, Shanghai, Guangzhou, and Shenzhen.
This reflects the policy's true target: not rescuing tier-1 markets, but giving first-home buyers in tier-2 and tier-3 cities a reason to enter, reinforcing the market bottom.
Will the housing market broadly recover?
Wu Wei, chief investment advisor at Datong Securities, sees a K-shaped divergence ahead: top-tier developers in core cities stabilize first and gain share; developers overexposed to tier-3/4 cities with tight cash flows continue to face clearance.
Liu Yunlong of Guorong Securities adds that this round of stimulus is inherently selective and structural — some regional developers will take much longer to recover.
This means → even after the policy lands, the gap between "who recovers first" and "who keeps struggling" will widen further. Not every developer gets rescued.
What does this mean for HK-listed property stocks?
The subsidy is part of a dense pre-holiday policy package — the revised Housing Provident Fund Regulation took effect September 20; the State Council executive meeting on September 28 called for stronger counter-cyclical measures to stabilize the property market.
Liu Yunlong recommends prioritizing developers with state-backed ownership, solid cash flow, and first-home-focused pipelines — these stand to benefit most directly and destock fastest.
Key HK-listed names: China Vanke (02202) reported H1 2026 revenue of about RMB 70.17 billion; Longfor (00960) posted cumulative contract sales of RMB 20.84 billion through August; Yuexiu Property (00123) recorded January–August contract sales of about RMB 61.21 billion, up roughly 12.4% year-on-year. Whether the policy effectively accelerates destocking of these developers' first-home projects is the key validation point ahead.
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