Recently, mortgage protests continued to bubble up in China, adding pressure on Chinese authorities to directly address growing discontent among homebuyers.
On July 20, about 200 owners of unfinished apartment projects in Wuhan city protested outside the Hubei branch of China’s banking regulator. The protester held signs and chanted: “Construction halts and mortgage stops! Deliver homes and get repaid!”.
Under the mortgage payment boycott, the banking regulator arranged for several individuals to meet representatives of four large state-owned banks. The home buyers asked to suspend their mortgage payments until their homes are delivered. However, the China Banking and Insurance Commission didn’t respond to their request.
In Zhengzhou, buyers of property projects from troubled developers such as China Evergrande Group and China Aoyuan Group have threatened to stop paying their home loans if construction stalls.
To prevent buyers from walking away from their mortgages, some city banks recently reached out to affected people, offering temporary loan relief in the form of interest payments without principal.
A homeowner in Zhengzhou said that he told the bank that he could pay only the interest on his mortgage for a year. A staffer at the bank’s Zhengzhou branch confirmed that some borrowers offered the same.
Last week, a wave among homeowners of unfinished property projects gathered steam on Chinese social media. They threatened to default on their mortgages. Investors worried that lenders could take a financial hit from mortgage defaults, made bank stocks tumbling.
According to Bloomberg, China’s commercial banks have disclosed their overdue loans on unfinished homes with more than 300 million dollars of credit at risk. GF Securities Co. expects that the boycott of buyers could impact as much as 296 billion dollars of mortgages.
China is looking to contain the protests that have flared up at 100 housing projects across 50 cities, threatening to spread the real estate crisis to the banking system.