Six major state-owned banks all issued announcements on September 30, 2026 regarding the implementation of interest subsidies for individual housing loans. One day earlier, fiscal and financial policies were rolled out simultaneously on both ends: household housing demand and financing for key sectors.
The Ministry of Finance, the People's Bank of China, and the National Financial Regulatory Administration announced that starting October 1, 2026, eligible newly issued first-home commercial individual housing loans will receive a fiscal interest subsidy of 1 percentage point on an annualized basis for a maximum of five years. On the same day, the People's Bank of China lowered the interest rate on Pledged Supplementary Lending (PSL) and brought the construction of the "six networks" into the scope of support, while also increasing the quotas for relending for technological innovation and industrial upgrading, as well as relending for agriculture and small and micro businesses.
From the perspective of policy content, the September 29 policy package includes both fiscal measures that directly reduce the interest burden on households purchasing homes and structural monetary policy tools aimed at key construction projects, technology enterprises, private enterprises, and small and micro business entities.
Housing loans included in interest subsidy scope for the first time
"The central government's implementation of an interest subsidy policy for resident home purchases is an exploration of ways to safeguard and improve people's livelihoods in the housing sector. By defining total housing prices, housing area, loan categories, and other criteria, it aims to precisely benefit target groups and help relatively lower-income families preparing to buy the most ordinary homes 'reduce their monthly payments,'" said relevant officials from the three departments: the Ministry of Finance, the People's Bank of China, and the National Financial Regulatory Administration. First, the policy focuses on first-home rigid demand, prioritizing support for ordinary families newly purchasing small to medium-sized, lower-priced housing. Second, the subsidy of 1 percentage point reduces the interest cost of residents' mortgage loans. Third, all eligible applicants should receive the subsidy, with fiscal subsidy funds fully guaranteed.
The central government had previously implemented interest subsidies on individual consumer loans and service industry operating loans, and supported equipment upgrading through expanded relending for technological upgrading. This marks the first time the central government has implemented interest subsidies at the national level for eligible commercial individual first-home mortgages. On September 29, the three departments issued the "Notice on Implementing the Interest Subsidy Policy for Resident Home Purchase Loans." According to official statements, this policy strengthens fiscal-financial coordination to support the rigid housing demand of urban and rural residents, helping new urban residents, newly employed college graduates, and other young people as well as urban wage-earning families reduce the cost of purchasing homes.
To qualify for the subsidy, three conditions must be met simultaneously: using a newly issued commercial individual housing loan to purchase a first home, excluding loan replacement; the purchased housing must have a floor area not exceeding 120 square meters; and the purchased housing price must not exceed 1.5 million yuan. Both new and second-hand homes are eligible, with first-home status determined according to current policies. Affordable housing and housing provident fund loans already have corresponding support and are not eligible for this subsidy on top of existing benefits. The subsidy is calculated based on loan principal at an annualized rate of 1 percentage point, with a maximum loan amount of 1 million yuan per household included in the subsidy, for a maximum period of five years. At current first-home commercial mortgage rates, a 1 percentage point subsidy is roughly equivalent to a one-third discount. For a 1 million yuan long-term housing loan, borrowers could reduce cumulative interest expenses by nearly 50,000 yuan at most. Subsidy funds are borne by the central government and local governments at 90% and 10% respectively, with no upper limit on the total scale during implementation, settled according to actual amounts incurred.
Based on a 1 million yuan, 30-year equal installment loan with a contract rate of 3.1%, the original monthly payment is approximately 4,270 yuan, with a first-month subsidy of about 833 yuan, bringing the actual burden to about 3,437 yuan. As the loan principal decreases, the monthly subsidy by the end of the fifth year is approximately 744 yuan, with cumulative subsidies over five years totaling about 47,400 yuan. After the five-year subsidy period ends, borrowers must still perform according to the original contract. The team led by Zhong Linnan at GF Securities converted the five-year subsidy into an interest burden over the full 30-year term, concluding that it is roughly equivalent to reducing the commercial mortgage rate from 3.1% to 2.8%-2.9%, or a targeted rate cut of 20-30 basis points. What the policy can truly stimulate is mainly families who already had home purchase plans but were temporarily holding off due to monthly payments and housing price expectations. Wu Chaoming of Caixin Research Institute believes that the home purchase subsidy supports rigid demand, reduces inventory, and safeguards livelihoods, with a relatively moderate boosting effect, summarizing it as "bottom-supporting easing rather than strong stimulus" — the subsidy helps stabilize transactions and reduce inventory, and its livelihood significance may outweigh its cyclical stimulus effect.
PSL rate cut, "six networks" included in support scope for the first time
On the same day the housing loan subsidy policy was released, the People's Bank of China adjusted several structural monetary policy tools. Among them, the one-year PSL rate was lowered from 1.75% to 1.5%, a decrease of 25 basis points. The PSL support scope was expanded to include the construction of the "six networks": water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipeline networks, and logistics networks. PSL is a collateralized loan provided by the People's Bank of China to the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China, mainly used to provide longer-term funding for specific sectors. PSL and housing loan subsidies transmit through different channels: housing loan subsidies are directly reflected in the monthly repayment amounts of eligible families, while PSL works through policy banks and related projects.
In the view of Zhou Yuanfan, chief economist at Anrong Rating, the 25 basis point PSL rate cut and the inclusion of the "six networks" as a whole in the support scope mainly reflect the policy effort in reducing the long-term funding costs of policy banks and expanding financing space for long-cycle infrastructure projects. "But what has been lowered is the cost for policy banks to obtain funds from the central bank, not the Loan Prime Rate (LPR)," Zhou Yuanfan said. This is targeted structural easing, not a comprehensive rate cut, and interest rates on residential mortgages, consumer loans, and ordinary corporate loans will not automatically decline as a result. Of course, from a medium-to-long-term perspective, the PSL rate cut should have a certain policy guiding effect. Wu Chaoming believes that PSL was previously concentrated in areas such as shantytown renovation, underground utility tunnels, and major water conservancy projects. This expansion to the "six networks" forms a relay with the support areas of new policy-based financial instruments, opening up space for physical work volume in infrastructure investment in the fourth quarter. Zhou Hao, an analyst at Guotai Haitong Securities, believes that this set of policies shows that growth stabilization is simultaneously shifting toward both the investment side and the household demand side, but the ultimate effect still depends on policy execution and whether the private sector is willing to respond.
In addition to PSL, the People's Bank of China also increased two relending quotas. Among them, the relending quota for technological innovation and industrial upgrading was increased by 200 billion yuan, bringing the total to 1.4 trillion yuan, while the support ratio for qualifying loans was raised from 60% of loan principal to 100%. The relending quota for agriculture and small and micro businesses was increased by 500 billion yuan, bringing the total to 4.85 trillion yuan, of which the relending quota for private enterprises was increased by 300 billion yuan to 1.3 trillion yuan. The two relending facilities added a combined 700 billion yuan in new quota. According to the policy arrangement, the support scope covers areas including technological innovation, equipment upgrading, private enterprises, agriculture-related entities, and small and micro enterprises.
How to apply and implement
The housing loan interest subsidy operates on a "no application required, automatic enjoyment" basis. According to the notice from the three departments, homebuyers apply for housing loans through normal procedures and authorize the bank to handle the subsidy when signing the loan contract. Banks verify eligibility based on online contract filing, housing purchase contracts, and loan documents, automatically deduct the subsidy when collecting monthly interest, and notify borrowers via text message or mobile banking message. All banks conducting commercial individual housing loan business may handle the subsidy according to regulations. Subsidy funds are managed through a "pre-allocation plus settlement" method, with handling banks reporting loan disbursement and fund usage on a monthly basis. The Ministry of Finance and the National Financial Regulatory Administration will conduct joint spot checks as appropriate. Those who obtain subsidies through irregular operations will have the relevant funds recovered. Banks colluding with clients in violations will be held accountable, and in serious cases, they may be prohibited from continuing to handle subsidy business.
Starting October 1, 2026, eligible resident housing loans will be the first to enter the implementation phase. The quota adjustments for PSL and the two relending facilities will be implemented by policy banks and commercial banks respectively according to relevant requirements. The September 29 package thus covers different areas including residential housing loans, key project financing, technological upgrading, and small and micro enterprises, with subsequent information focuses expected to fall on specific processing rules and policy implementation progress. The macro team at Caixin Research Institute believes that this package is an incremental policy rapidly implementing the State Council executive meeting decisions, signaling the start of a new round of growth stabilization. If subsequent economic data still falls short of expectations and pessimistic market sentiment is not reversed, it cannot be ruled out that aggregate tools such as reserve requirement ratio cuts and interest rate cuts may follow.