With lower monthly mortgage payments and the maximum mortgage term extended to 40 years, how can the home furnishing industry seize the opportunities brought by this wave of policy dividends?
On August 28, the "Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Construction of a New Development Model for the Real Estate Industry" jointly released by the People's Bank of China and the National Administration of Financial Regulation went viral across all online platforms and topped trending search lists: the maximum term for individual housing loans is extended from 30 years to 40 years; existing borrowers who face repayment difficulties due to temporary loss of income can negotiate with banks to adjust their repayment plans in accordance with market-oriented and legal principles; loans for sales of completed housing will be issued after sales filing, and loans for new pre-sold housing will be strictly issued only after completion filing.
"New Home Furnishing Paradigm" believes that for the home furnishing industry, this is not just another ordinary policy document. It will change where and how orders are generated in the next three to five years.
Lower monthly mortgage payments make home renovation plans more feasible
The cash flow along the full chain of home purchase, property handover, renovation and long-term residence has been recalibrated. The most intuitive change occurs in the monthly mortgage payment. The 40-year term is the upper limit, not a mandatory requirement that all loans must last 40 years. Borrowers can negotiate with banks based on their age, income and debt repayment capacity, and choose a term of 20 years, 30 years or 40 years. With an extended term, the monthly payment is usually lower under the same conditions, while the total interest paid will be higher.
Home renovation decisions rarely focus on "how much total interest I will pay for the whole life", but on "whether I can afford to renovate my kitchen and bathroom this month". According to the commonly used public calculation standards, taking a small essential home in a first-tier city as an example, with a 1 million yuan loan, an annual interest rate of 3% and equal principal and interest repayment, the monthly payment for a 30-year loan is about 4216 yuan, while the monthly payment for a 40-year loan is about 3581 yuan, saving roughly 635 yuan per month, and the specific figure varies by city and loan amount. Not all of this sum will be included in the home renovation budget, but it is enough to push some families from the attitude of "just live in it temporarily and consider renovation later" to the practice of "step-by-step renewal and phased partial transformation".
Another more critical rule is that existing borrowers with difficulties in repaying their mortgages can negotiate for adjustment. The precondition specified in the document is the temporary loss of income, and banks can postpone repayment, extend the term or delay principal repayment. It is not unconditional debt relief, nor is it a policy that all borrowers can apply for.
Its significance for the industry lies in maintaining the basic market. Once the expectation of mortgage default rises, a deadlock will emerge that people dare not renovate even after getting the house, and are unwilling to improve the houses facing default. The precondition of home furnishing and decoration demand is stable residence. Only when people's living situation is stable, can the orders be stable. With negotiable repayment plans, the certainty of residence and house transformation will be higher.
With loan terms extended to 40 years, residence also enters the long-cycle service stage
Apart from improving certainty, the new policy is also promoting another change: extending the residence cycle. In the past, the home furnishing industry used to follow the pace of new construction starts and new house deliveries. The current policy direction is clear, which is to promote the issuance of loans for completed housing after completion filing, to protect home buyers' right to get the houses before repaying the loans.
This will bring two major changes.
The residence cycle is being valued properly. The 40-year upper limit does not mean that all borrowers will choose a 40-year loan, but it releases a signal that housing consumption is shifting from a short-term leverage game to a long-term life arrangement. Home furnishing products will also change from the mode of one-time installation for 10 years of use, to the mode of maintainable, iterable and aging-friendly products. The kitchen can be partially renovated, the bathroom can be transformed into a barrier-free space, the lighting and security system can be upgraded, and the storage space can be reorganized with the change of family structure.
The combination of finance and home decoration has new scenarios. Banks are willing to design longer-term plans according to the real repayment capacity of borrowers, and home furnishing enterprises can also make the renovation installment, renewal installment and partial transformation packages more transparent. These changes on the financial side are forming a joint force with fiscal policies.
Starting from August, the scope of discount interest policies for personal consumption loans and credit card installments has been expanded and the quota has been raised: special renovation installments, consumption installments and other items are included in the support scope, and the annual upper limit of discount interest for a single institution is raised from 3000 yuan to 5000 yuan. The significance of this policy for home furnishing consumption does not lie in "paying the bill automatically for consumers", but in reducing the cost of compliant installments, which may push some families to make decisions on partial transformation and kitchen & bathroom renewal in advance. With credit policies shifting from one-size-fits-all mode to differentiated and humanized mode, superimposed on the cost reduction brought by discount interest, home furnishing businesses are no longer just selling boards and cabinets, but providing residence services for dozens of years in the future.
What the extended mortgage term lengthens is the repayment cycle, while what the home furnishing industry needs to extend is the service commitment to the whole life cycle of each family. The enterprise that turns this concept into products, after-sales services and repurchase mechanisms first will seize the most certain incremental space brought by this round of policies.
Focus on sentiment in the short term, stock market in the medium term and capability in the long term
Facing such a long-cycle trend, enterprises cannot take reckless actions, and need to move forward in three steps.
Short-term (0 to 6 months): The first move is not large-scale demolition and reconstruction, but meeting low-threshold and high-certainty demands: partial transformation of second-hand houses, kitchen and bathroom renewal, wall repair, old cabinet renovation, smart door lock and lighting upgrading. It is necessary to clearly realize that the policy will not reverse the market overnight, but promote the bottom recovery of the industry.
Medium-term (6 months to 2 years): Compete in the stock market by improving construction site management, quotation transparency and after-sales service quality. After the negotiation mechanism is implemented, the monthly cash flow of some families will be more flexible, and they are more willing to spend money to improve their living experience. Leading customized home furnishing enterprises have listed community stores and partial transformation packages as key businesses in their performance exchanges, and the whole industry is already taking action. At this stage, the competition focuses on partial transformation capability, whole-house decoration delivery capability and supply chain response capability. Only by managing construction sites meticulously, making quotations clear and providing long-term after-sales services can enterprises obtain repurchase opportunities and good reputation in the stock market.
Long-term (more than 2 years): Accumulate core capabilities and shift from selling boards to providing long-term services. The real estate industry is dominated by stock market now, and the dividend of roughcast houses will no longer benefit all enterprises equally. Old community renovation, aging-friendly transformation, green building materials and smart home system integration will become stable tracks. As the mortgage term matches the longer residence cycle, enterprises need to accumulate capabilities in long-term operation and maintenance, digitalized services and modular iteration.
This is not a general rise of the whole industry, but a conditional medium-term structural benefit. The policy benefits leading enterprises with strong delivery capability, digital capability and stock operation capability, as well as segmented players focusing on partial transformation, intelligent products and aging-friendly businesses. The policy will bring limited promotion to enterprises that rely on the traffic of new roughcast houses.
Do not expect massive stimulus policies, and actively obtain certain orders
The core of the policy is not to take responsibility for any party, but to realign reasonable housing demands with real repayment capacity. The confidence of the home furnishing industry comes from three verifiable facts.
The certainty of property handover is enhanced: pre-sold housing loans will be issued after completion filing, which reduces the mismatch that people have to pay monthly mortgage before getting the house. The monthly payment plans are more flexible, so young families and upgrading families have more choices in their payment rhythm. Repayment difficulties can be negotiated, which prevents the basic stock residence market from being completely impacted by sudden income interruption.
The corresponding actions for enterprises are very simple. Talk less about the bull market brought by policies, and focus more on scenario-based packages adapted to monthly cash flow. Chase less new house opening events, and build more partial transformation service networks around communities. Sell less one-time large-value orders, and provide more sustainable renewal services for kitchens, bathrooms and aging-friendly spaces. Lower monthly payments make customers more willing to renovate; but only the staff who come to the door with solutions and tape measures can turn customers' willingness into formal contracts. What makes this round different is that opportunities do not wait in stores, but exist in the communities you visit, the kitchens you measure and the elderly's bathrooms you inspect.
These seemingly trivial actions eventually point to a change of time concept.
The 40-year mortgage term is most easily misread as a panic about high total interest. What it really changes is people's time concept. Housing is no longer a short-term asset game, but a long-term living carrier. In the next stage of the home furnishing industry, we should not only focus on how many new houses are delivered every day, but also pay attention to how many families are willing to live in their houses for a longer time and in a better way.
The policy provides a more stable starting point for residence, and the industry needs to provide more stable residence solutions. By extending service commitments to the whole life cycle and delivering services to every household, confidence is not achieved by shouting slogans, but by actual delivery. This is the most simple appearance of the transformation from ensuring people have a place to live to ensuring people have a good place to live.
This article is from the WeChat official account "New Home Furnishing Paradigm", author: Jia Mu, published with authorization from 36Kr.