Smoothing Repayment of Outstanding Mortgages and Household Consumption Recovery A Policy Mechanism under Household Cash-Flow Constraints

When households shift from leveraging up to active deleveraging, lower borrowing costs and greater credit supply do not necessarily translate into new household borrowing and consumption. In the first half of 2026, RMB loans increased by RMB 10.72 trillion, of which household loans declined by RMB 366.8 billion while loans to enterprises and public institutions increased by RMB 11.13 trillion, revealing a marked divergence between household credit demand and aggregate financing to the real economy. The 2024 batch reduction in outstanding mortgage rates benefited more than 50 million households and reduced borrowers' annual interest expenses by about RMB 150 billion, demonstrating the real demand for lowering housing-debt burdens; however, reducing the price of debt is not the same as smoothing the timing of debt service. During extraordinary periods of pronounced macroeconomic demand weakness, a repayment-smoothing mechanism for outstanding mortgages can be built for owner-occupied households with high mortgage-payment burdens, low liquid assets, and sustainable long-run repayment capacity: principal is not forgiven, current repayment intensity is temporarily reduced, and the remaining balance is re-amortized after the relief window. A unit-scale scenario shows that for every 10 million participating households, a monthly cash-flow release of RMB 2,500 per household would free RMB 300 billion annually; with marginal propensities to consume of 0.3–0.7, first-round direct consumption would rise by roughly RMB 90–210 billion. The mechanism should complement mortgage-rate adjustments, income-support measures, and trade-in programs for consumer goods: it allows necessary precautionary saving, while programmable e-CNY smart contracts may serve only as an optional module for voluntary consumption incentives and policy evaluation. Policy feasibility depends on state-contingent triggers, rule-based eligibility, separate accounting of bank liquidity costs and incremental interest costs, pre-coordinated risk classification, and small-scale reversible pilots.