Suggested Launch of "Mortgage Interest Subsidy" Package; Here's What Representatives and Committee Members Say About the Real Estate Market

During this year’s National Two Sessions, “Mortgage Interest Subsidies” became a hot topic among delegates and committee members.

Zhai Meiqing, member of the Chinese People’s Political Consultative Conference (CPPCC) and Chairman of Xiangjiang Group, suggested replacing broad interest rate cuts with targeted fiscal interest subsidies, recommending a 50-75 basis point subsidy for first-time homebuyers;姚劲波, a National People’s Congress (NPC) deputy and Chairman and CEO of 58.com, proposed including interest on newly purchased homes in the special additional deduction for personal income tax.

In recent years, many regions across the country have introduced mortgage interest subsidy policies, including subsidies for provident fund loans, targeted subsidies for key talent and low-income families, and mortgage interest subsidies for couples registering their first marriage, based on loan amounts.

Industry experts believe that mortgage interest subsidies can help boost market confidence. Future implementation is likely to be a gradual, top-down approach with local governments tailoring policies to their cities, prioritizing new first-time home loans, and initially testing in cities with high housing prices and severe inverted interest rate and rental yield ratios. Expansion will depend on results and financial capacity.

Voices from the Real Estate Sector During the Two Sessions

During the 2026 National Two Sessions, policy suggestions related to real estate continued to be frequent.

Overall, the policy proposals from delegates and committee members this year mainly focus on three areas. First, stabilizing the market through tools like fiscal interest subsidies, personal tax deductions, and reductions in transaction taxes and fees to lower the costs for first-time and upgrading homebuyers. Second, improving supply by controlling new construction and stock. Third, promoting market circulation through unified housing voucher systems and standardized “mortgage with collateral transfer” procedures to activate the housing exchange chain.

Among these, “Mortgage Interest Subsidies” again attracted attention from delegates and the market.

This year, Zhai Meiqing, a CPPCC member and Chairman of Xiangjiang Group, emphasized that China’s economic recovery still needs consolidation. A healthy and stable real estate market can bring confidence and momentum to economic growth.

He recommended optimizing demand management, stabilizing housing price expectations, and launching phased pilot programs like “buy a home and receive shopping vouchers” in key cities, distributing consumer coupons for appliances and cars proportional to purchase amounts; exploring increasing the cap for personal income tax deductions on mortgage interest to stimulate consumption.

At the same time, he called for strengthening financial support to ease burdens on residents and businesses. On the demand side, replacing broad rate cuts with targeted fiscal interest subsidies, recommending a 50-75 basis point subsidy for first-time home loans, with an additional 20-25 basis points for families with multiple children and new residents, and about 50 basis points for existing mortgages, to reduce repayment pressure and unlock consumption potential.

Yao Jinbo, a NPC deputy and Chairman and CEO of 58.com, suggested that the current “sell old and buy new” market is at a critical stage driven by strong policies. Lowering entry barriers and transaction costs can activate the second-hand housing market and facilitate the exchange between new and second-hand homes.

Specifically, he proposed including interest on new home loans in the personal income tax special deduction. The scope would cover interest on commercial and provident fund loans for the taxpayer or their spouse purchasing property in China, with a standard deduction of 3,000 yuan per month, for up to 20 years.

Yan Yuejin, Deputy Director of the E-House Research Institute in Shanghai, noted that the suggestions from these delegates and members address current market pain points, such as the affordability constraints faced by new residents and large families. Their proposals aim to reduce the holding costs for homebuyers and activate the “sell old and buy new” exchange chain.

Beyond micro-level suggestions, Liu Yonghao, Chairman of New Hope Group and a CPPCC member, emphasized that real estate is a vital pillar of the national economy. Despite deep industry adjustments in recent years, policy measures have been incremental and ineffective. He recommended implementing a set of strong policies that coordinate efforts across finance, taxation, and housing departments.

Multiple Cities Have Started Testing “Mortgage Interest Subsidies”

Regarding “Mortgage Interest Subsidies,” several Chinese cities have begun pilot programs tailored to local conditions.

On March 2, Nanchong announced measures to stabilize the birth rate, including a mortgage interest subsidy. Under the new policy, couples registering their first marriage in Nanchong can receive a one-time financial subsidy covering 1% of their loan amount, with a maximum loan subsidy of 200,000 yuan.

This means young couples in Nanchong getting married and buying a home will have part of their mortgage interest subsidized by the government.

Additionally, from January 1, 2026, to December 31, 2028, families with two or three children and registered in Nanchong can receive housing purchase subsidies of 50,000 yuan and 100,000 yuan respectively, with a maximum total of 150,000 yuan.

Previously, Fujian province issued documents encouraging localities to implement phased housing purchase subsidies and loan interest subsidies based on their circumstances. The province’s “Opinions on Further Promoting Stable Development of the Real Estate Market” explicitly support various talent tiers through subsidies and interest subsidies to meet housing needs.

According to Dongwu Fixed Income, since late 2023, many regions have introduced mortgage interest subsidy policies, which vary in form—mainly “fixed proportion interest subsidies” and “interest rate subsidies.” Some also include targeted subsidies from property developers as “market-oriented supplements.”

The most common approach is fixed proportion subsidies based on the loan amount. For example, Changchun and Wuhan provide interest subsidies equal to 1% of the initial loan; Nanjing employs tiered policies, offering different subsidies for homes under 90 square meters, with a maximum of 2% of the loan.

Some regions adopt interest rate-based subsidies, often for long-term incentives or specific groups. For instance, Yuncheng offers subsidies based on a percentage of the loan interest rate, mainly targeting high-level talent, with different subsidy ratios and caps.

Dongwu Fixed Income believes that mortgage interest subsidies can precisely target specific market phases and support multiple policy goals, helping boost confidence and stabilize expectations. Most local policies specify clear timeframes, limits, and disbursement rules, reflecting “targeted drip irrigation, fiscal controllability, and short-term incentives.”

In addition to official subsidies, some property projects have launched market-oriented subsidy schemes.

For example, Xuzhou’s Xinsheng Yincui project offers direct interest subsidies of 1-1.3% on top of the current commercial loan rate of 3.05% and provident fund rate of 2.6%, with a 30-year subsidy period. Nantong’s Taoli Chunfengyuan project offers a 1% subsidy on a 3.05% mortgage rate, also for 30 years.

Dongwu Fixed Income notes that property developer targeted subsidies are market-driven and initiated by the companies themselves, covering their costs. These are essentially discounts on property prices, with thresholds, durations, and fulfillment depending on the company’s financial health and creditworthiness, lacking policy universality and stability.

Overall, Dongwu Fixed Income believes that mortgage interest subsidies are demand-side cost support measures that cannot alone resolve issues like asset prices, developer debt, or structural supply-demand imbalances. Even with limited scope, they impose significant fiscal pressure. A nationwide uniform policy is unlikely to be feasible.

Therefore, future implementation is likely to be a gradual, city-specific approach driven from the top down, prioritizing new first-time home loans, initially testing in cities with high prices and severe interest rate and rental yield inversions, then expanding based on results and financial capacity to include upgrading and existing loans.

According to the China Index Academy, the trend in real estate policy in 2026 will still focus on lowering entry barriers, reducing costs, increasing homeownership willingness and capacity—such as optimizing restrictive policies in core cities, lowering mortgage rates, reducing agency fees, increasing mortgage interest tax deductions, and providing interest subsidies.

(This article is from Yicai.)