Student Question: Master Chi, this year many regions have seen a wave of early mortgage repayments. The current first-home interest rate at commercial banks for new properties is between 3.7% and 3.9%, whereas the average rate on older home loans was around 5.8%. Will lowering existing mortgage rates help stimulate the new home market?
Master Chi’s Response: Of course it will. If you currently have an outstanding loan and the bank brings the rate down further, naturally your total interest burden is reduced.
Right now, people are embracing the carry-over mortgage transfer model (带押过户) when upgrading or purchasing homes.
There is one important operational detail buried in the middle of all this — the interest rate question. When a mortgage is carried over in the transfer, does the buyer repay at the old rate or the new one?
If it can be settled at the new rate, that brings the mortgage down from the 5–6% range to 3–4%. Transaction speeds under the carry-over model will naturally pick up. That’s why I consider this an effective measure — it genuinely reduces monthly payments and makes homeownership more accessible to more young people.
There are two key differences between how we buy homes and how people abroad do it.
First, China has a large population of single children. When a purchase exceeds someone’s own financial capacity, the entire family clan steps in — pooling money and resources together. This accumulates enormous tension within families and across society. People end up buying homes before they’re truly ready, simply because the whole family is backing them. Abroad, there is no such family-wide support structure, so the average home-buying age is 37 to 40.
In China, the majority of buyers are under 30. This dynamic is precisely what creates such intense pressure.
On top of that, our mortgage rates are somewhat elevated. For some households, loan repayments exceed 50% of total income. The remaining money still has to cover daily living, education, healthcare, and a whole range of other necessities. Naturally, things get extremely tight — anxiety becomes the default state.
Looking forward, from both a banking and policy perspective, two things need to happen.
First, gradually shift the expected home-buying age later. For example, get married before 30, rent first, rent until 35 — once life has stabilized on all fronts, then purchase a home.
Second, total repayment obligations should be kept to no more than one-third of income, and absolutely no more than half under any circumstances.
Address those two things, and this problem is essentially solved.