China's 1-point mortgage subsidy starts 1 October 2026: what it means for building-material and home-goods importers
A one-year, 1-percentage-point interest subsidy capped at 120 sq m and 1.5 million yuan per home concentrates Chinese housing demand in mid-market apartments
China's Notice 财金〔2026〕95号 pays a 1-percentage-point annual interest subsidy on home loans from 1 October 2026, capped at 120 sq m, 1.5 million yuan and 1 million yuan of principal. Here is the per-home arithmetic and what it does to building-material and home-goods orders.
AI Summary
China’s Ministry of Finance, central bank and financial regulator issued Notice 财金〔2026〕95号 on 29 September 2026. From 1 October 2026, for a provisional one year, home-purchase loans carry a 1-percentage-point annual interest subsidy on principal, paid for up to five years. Eligibility stops at 120 square metres, a 1.5 million yuan purchase price and 1 million yuan of subsidised principal per household. The subsidy is worth at most 10,000 yuan a year per home. It pulls demand toward mid-market apartments, and that is the segment whose fittings and finishes an importer sells.
What happened
Three Chinese authorities — the Ministry of Finance, the People’s Bank of China and the National Financial Regulatory Administration — published Notice 财金〔2026〕95号 on 29 September 2026. The notice creates a residential home-purchase loan interest subsidy.
The terms, as written in the notice:
- Start date and term. The policy takes effect on 1 October 2026 and runs for a provisional one-year term.
- Subsidy rate. The finance authorities pay an annualised 1 percentage point of loan principal, for a term of no more than 5 years.
- Principal cap. The loan principal per household that qualifies for the subsidy is capped at 1 million yuan.
- Floor-area cap. The home purchased must have a building floor area of 120 square metres or less, inclusive.
- Price cap. The home purchased must have a price of 1.5 million yuan or less, inclusive.
- Funding split. The central finance authority carries 90% of the subsidy money and local finance carries 10%.
Interest subsidy (贴息) — a payment that reduces the interest a borrower actually pays, made here by the finance authorities to the lending bank rather than to the buyer. The borrower’s contractual rate does not change; the subsidy covers 1 percentage point of the annual interest on the covered principal, so the effective cost of the loan falls by that amount for as long as the subsidy runs.
The caps do the work. A household buying a 3 million yuan apartment gets nothing. A household buying a 200 square metre flat gets nothing. A household borrowing 2 million yuan gets the subsidy on 1 million yuan of that principal and no more. The instrument is written for the mid-market buyer, and the arithmetic below shows how small the benefit is per home.
Why now
The notice is dated 29 September 2026 and starts two days later, on 1 October 2026. The term is provisional and one year long. That combination — a short window, a hard start date, and caps that exclude the top of the market — tells an importer what to plan against: a twelve-month pulse of purchase decisions in a defined price and size band, not a permanent change in Chinese housing demand.
The funding split matters for how reliably the money moves. With 90% from the central budget, the subsidy does not depend on a single province’s fiscal position. The 10% local share is the only part that varies by jurisdiction.
So what
The judgement first: this is a demand-timing signal for mid-market building materials and home goods, not a price signal for your invoice. Nothing in the notice changes a duty, a freight rate or a factory gate price. What it changes is when a defined group of Chinese households signs a purchase contract, and therefore when they buy kitchens, bathroom fittings, flooring, doors, lighting and furniture.
The arithmetic per home is the reason to keep expectations modest. The subsidy is 1 percentage point a year on covered principal, capped at 1 million yuan, for up to 5 years.
| Home price (yuan) | Loan principal (yuan) | Subsidised principal (yuan) | Subsidy per year (yuan) | Subsidy over 5 years (yuan) |
|---|---|---|---|---|
| 800,000 | 560,000 | 560,000 | 5,600 | 28,000 |
| 1,200,000 | 840,000 | 840,000 | 8,400 | 42,000 |
| 1,500,000 | 1,050,000 | 1,000,000 | 10,000 | 50,000 |
The loan column assumes a 70% loan-to-value ratio, which is a modelling assumption of this article and not a figure from the notice. The subsidised principal column applies the 1 million yuan cap. The last row is the ceiling case: a home at the 1.5 million yuan price cap, financed at 70%, borrows 1.05 million yuan, of which 1 million yuan is subsidised. The maximum benefit any household can receive is 10,000 yuan a year, or 50,000 yuan across the five-year subsidy term.
Put that against the purchase. On a 1.5 million yuan home, 50,000 yuan over five years is a little over 3% of the price, spread thin. On an 800,000 yuan home the five-year benefit is 28,000 yuan, about 3.5% of the price. The subsidy is real money to a household and small money against the transaction. It moves a buyer who was already close to a decision; it does not create a buyer who was not in the market.
For an importer, the useful consequence is the shape of the demand, not its size. Three things follow.
The band is narrow and it is the mid-market. Homes at or below 120 square metres and at or below 1.5 million yuan are the target. In most Chinese cities that is a two- or three-bedroom apartment, not a villa and not a luxury flat. The fittings that go into those apartments are the standard range: mid-priced sanitaryware, engineered flooring, standard kitchen units, interior doors, basic lighting. If your Chinese order book is weighted to premium finishes, this policy does not reach your customer.
The timing is a twelve-month window with a five-year tail. Loans must be issued during the one-year policy window to qualify, and the subsidy then runs for up to five years on those loans. So the purchase decisions cluster in the window, and the fitting-out spend follows each purchase by the usual lag between handover and renovation. An importer planning orders should expect the demand pulse to sit inside and just after the window, not spread evenly across five years.
The per-home value is small, so the volume effect depends on how many households cross the line. A 10,000 yuan annual subsidy does not rescue a household that cannot afford the mortgage. It tips a marginal buyer. The size of the demand shift is therefore a function of how many households sit near the eligibility boundary in the cities where your buyers operate, and the notice does not publish that number.
Work a second case to see how the cap bites. A household buys a 1.4 million yuan home at 70% loan-to-value, borrowing 980,000 yuan. That is under the 1 million yuan principal cap, so the whole loan is subsidised: 9,800 yuan a year, 49,000 yuan over five years. Now the same household buys a 1.5 million yuan home and borrows 1,050,000 yuan. Only 1,000,000 yuan is subsidised, so the annual benefit is 10,000 yuan, not 10,500 yuan. The extra 50,000 yuan of borrowing above the cap earns no subsidy. The cap binds at the top of the eligible price band, which is exactly where a buyer is deciding whether to stretch to a larger or better-finished apartment. The policy nudges that buyer down, toward the home whose full loan is covered.
That is the mechanism an importer should price against: demand pulled toward the smaller, cheaper, standard-finished apartment. The materials that go into that apartment are the ones with the volume.
How confident
Confirmed. The start date of 1 October 2026, the provisional one-year term, the 1-percentage-point annual subsidy rate on principal for up to 5 years, the 1 million yuan principal cap, the 120 square metre floor-area cap, the 1.5 million yuan price cap, and the 90%/10% central/local funding split all appear in the text of Notice 财金〔2026〕95号, published 29 September 2026. Every figure in this article traces to that single instrument.
Inferred. The loan-to-value ratio of 70% used in the tables is a modelling assumption, not a figure from the notice, and a different ratio changes every subsidy amount in the tables. The claim that the caps concentrate demand in mid-market apartments is an inference from the cap values, not a statement in the document. The notice does not publish the number of households near the eligibility boundary, the cities where the effect is largest, or any estimate of the demand shift. All of that rests on the single notice and on the arithmetic shown here, and none of it has been cross-checked against a second document.
What would change my mind. A published figure on the number of eligible households, or on the share of home sales that fall inside the 120 square metre and 1.5 million yuan caps in the cities where Chinese building-material buyers operate, would let the demand effect be sized rather than described. A second instrument extending the term beyond one year, or raising the caps, would change the timing judgement. Absent either, the conclusion stands: a small per-home benefit, concentrated in a defined band, over a twelve-month window.
Also read: EU FDI Screening 2026 Rules, Notification Volumes and 2028 Timelines for Importers
Work it out: the landed cost calculator
Different question, same method: the step-by-step guides
For you
- Importers of standard fittings and finishes: treat the twelve months from 1 October 2026 as the order window and place production bookings so that goods land as purchases convert to handovers, not before.
- Importers whose Chinese order book is weighted to premium finishes: do not build inventory against this policy; the 120 square metre and 1.5 million yuan caps exclude the homes your products go into.
- Importers with a mixed range: split the forecast, holding premium lines flat and adding volume only to the standard mid-market lines that fit a two- or three-bedroom apartment.
- Importers negotiating 2027 supply contracts: use the small per-home value — at most 10,000 yuan a year — to keep supplier price expectations grounded, and check the input-cost arithmetic in Your Supplier’s Input Costs Rose 5.8%. Your 2027 Invoice Should Not. before agreeing a number.
The data point
The maximum subsidy any single household can receive is 10,000 yuan a year, because the 1-percentage-point rate applies to no more than 1 million yuan of principal.
FAQ
Does the subsidy change the price I pay for goods from China?
No. Notice 财金〔2026〕95号 pays an interest subsidy to home buyers through the lending banks. It does not touch export prices, export duties, VAT rebates or freight. Your invoice from a Chinese supplier is set by the supplier’s costs and your negotiation, and the subsidy does not enter that calculation. What the subsidy changes is the volume and timing of Chinese domestic demand for building materials and home goods, which feeds back into factory order books and lead times. Watch lead times and capacity, not prices, as the effect of the policy.
Which Chinese homes qualify for the subsidy?
A home qualifies if its building floor area is 120 square metres or less, inclusive, and its purchase price is 1.5 million yuan or less, inclusive. The loan must be issued during the one-year policy window that starts on 1 October 2026. The subsidised principal per household is capped at 1 million yuan, so a larger loan is only partly covered. A home above either cap gets nothing, and a loan above the principal cap gets the subsidy on the first 1 million yuan only. The caps are written into the notice and apply per household.
How long does the subsidy last for a household that qualifies?
The policy window itself is a provisional one year from 1 October 2026, and loans must be issued inside it. For a qualifying loan, the subsidy runs for a term of no more than 5 years. So a household that takes a loan in the first month of the window can receive the subsidy for up to five years, while a household that takes a loan in the last month gets the same five-year maximum from a later start. The five-year term is a ceiling on the subsidy, not a guarantee that it runs the full period.
How we calculated this
Subsidy per year = 1% x min(loan principal, 1,000,000 yuan)
Subsidy over term = subsidy per year x min(term, 5 years)
Case A: 800,000 yuan home, 70% LTV
loan principal = 800,000 x 0.70 = 560,000
subsidised principal = min(560,000, 1,000,000) = 560,000
subsidy per year = 0.01 x 560,000 = 5,600
over 5 years = 5,600 x 5 = 28,000
Case B: 1,200,000 yuan home, 70% LTV
loan principal = 1,200,000 x 0.70 = 840,000
subsidised principal = min(840,000, 1,000,000) = 840,000
subsidy per year = 0.01 x 840,000 = 8,400
over 5 years = 8,400 x 5 = 42,000
Case C: 1,500,000 yuan home, 70% LTV
loan principal = 1,500,000 x 0.70 = 1,050,000
subsidised principal = min(1,050,000, 1,000,000) = 1,000,000
subsidy per year = 0.01 x 1,000,000 = 10,000
over 5 years = 10,000 x 5 = 50,000
Case D: 1,400,000 yuan home, 70% LTV
loan principal = 1,400,000 x 0.70 = 980,000
subsidised principal = min(980,000, 1,000,000) = 980,000
subsidy per year = 0.01 x 980,000 = 9,800
over 5 years = 9,800 x 5 = 49,000
Cap check: 1,500,000 yuan home at 70% LTV borrows 1,050,000.
Only 1,000,000 is subsidised; the 50,000 above the cap earns nothing.
Annual benefit is 10,000, not 10,500.
Funding split: central 90%, local 10% of every subsidy amount above.The 70% loan-to-value ratio is an assumption of this article. The 1%, 1,000,000 yuan, 120 square metre, 1,500,000 yuan, 90% and 10% figures come from Notice 财金〔2026〕95号.
The point
The subsidy is small per home and narrow in scope, and that is the whole story for an importer. At most 10,000 yuan a year, on homes at or below 120 square metres and 1.5 million yuan, for a twelve-month window — it tips marginal buyers toward standard mid-market apartments and leaves the premium end untouched. Plan orders for the standard range into the window and just after it, hold premium lines flat, and do not let a supplier tell you the policy justifies a higher price. For the cost side of the same order, read China’s Factory-Gate Prices Turned Positive, and That Ends the Wait-for-Next-Year Trade and Factory Prices Rose 5.0%, Split 20 Points, and confirm your supplier’s status with How to Tell a Factory From a Trading Company Before You Wire a Deposit before you commit volume to the window.
For the paperwork and the cost in one place, see China home permit application.
For the paperwork and the cost in one place, see China home return permit application.
For the paperwork and the cost in one place, see China home return permit application hong kong.
For the paperwork and the cost in one place, see Can a Foreigner Buy Property in China? Rules and Subsidies.
Sources
- Ministry of Finance, People's Bank of China and National Financial Regulatory Administration, Notice 财金〔2026〕95号 on implementing the residential home-purchase loan interest subsidy policy (published 29 September 2026)
How this was made
Research and drafting are tool-assisted. Every figure is traced to a named primary source and checked against it, each article clears a structural review and an information-gain review before publication, and corrections are recorded in a dated note above. The review process is described on the about page.