Chinese stop paying mortgages as developers unable to finish projects

HONG KONG: The China Banking and Insurance Regulatory Commission has urged Chinese banks to increase loan support for real estate developers so they can complete unfinished projects.

The country is facing two of its largest problems—mortgage boycotts and frozen bank accounts—both of which are threatening social stability in the country, as thousands of disgruntled homebuyers are staging a mortgage boycott across the country.

The payment boycott is in response to an increasing number of projects being delayed or stalled by shortages of cash among property developers.

Home prices are also falling, with some buyers now in possession of properties that are worth less than they agreed to pay, causing difficulties in meeting their mortgage payments.

Buyers across 18 provinces and 47 cities have stopped making payments, as of last week, according to multiple state media reports and data compiled by Shanghai-based research firm China Real Estate Information Corporation.

Meanwhile, the regulator pledged this week to work closely with local governments to ensure timely deliveries of unfinished residential projects, according to a report by China Banking And Insurance News, the regulator’s own publication, citing an unnamed official from the CBIRC.
Developers rallied throughout China on the news this week.

But analysts advised caution.

“While this move [by the regulator] is encouraging, the issue is very complicated and it is unlikely the CBIRC will be able to handle it on its own,” said Nomura analysts, as quoted by CNN.

To address rising public anger over frozen deposits at some rural banks in the country, the regulator has pledged to boost capital buffers for small banks, which are facing worsening balance sheets amid a weak economy and a slump in the property market.

Protests have erupted in recent weeks in central China, as thousands of depositors could not access their savings at several rural banks in the region.

Last week, China reported its gross domestic product, the broadest measure of its economy, grew 0.4 percent from one year ago in the second quarter, the weakest performance since the first quarter of 2020.

Disclaimer: This report is automatically generated from worldwide news services. NTN is not responsible for its content and does not moderate it.

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