TradingKey - On August 28, Eastern Time, KE Holdings (BEKE) surged over 17% in pre-market trading. As of press time, KE Holdings was up 11.11% at $19.70. The real estate financing system reform introduced on the same day was seen by the market as a positive signal.

[Source: TradingView]

The People's Bank of China and the National Financial Regulatory Administration jointly issued the "Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Construction of a New Model for Real Estate Development." The National Financial Regulatory Administration simultaneously issued five supporting measures targeting commercial housing development loans, personal housing loans, commercial property loans, urban renewal project loans, and trust companies' real estate trust business, respectively.

Regarding development loans, a lead bank system will be implemented, where a single real estate project will have one bank as the lead bank to manage project funds in a closed loop. The loan term will match the project construction and sales cycles, with a maximum of 5 years for pre-sale projects and 7 years for existing home sales projects.

Regarding personal housing loans, the disbursement timing has been adjusted: for existing home sales projects, loans will be disbursed after sales filing, while for pre-sale projects, loans will be disbursed after completion filing. The maximum loan term has been extended from 30 years to 40 years. The measures cap the monthly mortgage-to-income ratio below 50% and the monthly total debt-to-income ratio below 60%.

As China's largest real estate transaction and service platform, KE Holdings' business is directly linked to real estate market activity. Adjusting credit rules across the entire chain from development and sales to operations, this financing reform represents an important implementation of the new framework for the real estate market financing mechanism.

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