The outbreak of unfinished or rotten-tail buildings in many parts of China has led to a wave of disgruntled homebuyers refusing to pay mortgages.
As reported by Bloomberg, the number of projects facing loan snub has been increasing quickly in the last few days. On July 11, only 28, the next day, the figure rose to 58 projects. July 13 witnessed a nearly doubled figure with at least 100 projects. On July 14, Apollo reported that the loan suspension project had reached 150.
Bloomberg says the current housing loan boycott has occurred across over 50 cities.
The Ministry of Housing and Urban-Rural Development urgently held meetings with major Chinese banks and financial regulators to discuss solutions. They worry about the movement of mortgage-paying refusals, which causes more buyers to follow suit. Consequently, it can spark losses in Chinese bank shares and developer bonds. Thus, China’s property crisis may spread to the financial system, triggering social unrest.
At present, the meeting results in no immediate solution.
A relevant person from a large state-owned bank says that generally, when signing a contract, the borrower’s repayment obligation is unconditional. As for housing delivery, it is a matter between the buyer and the developer, and the bank has no direct relationship.
This statement angered many netizens, one of which was liked by more than 50,000 netizens, indicating the bank’s illegal issuance of loans is a serious breach of contract.
Another asks what the banks think and why they don’t ask the people how they want to live. This message also received support from more than 30,000 people.
Someone says it’s very depressing not to get a house, and the homebuyers must continue to repay the loan. They would like to stop payment because real estate companies are facing losses. Therefore, it is difficult to pay off the money. Moreover, many buildings are unfinished and even collapsing.