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Homebuyers in China Default on Mortgage Payments en Masse as Country Faces Crisis

The ‘stop mortgage repayment’ movement has spread

 on 15th July 2022 @ 5.00pm
public refusal to pay toward unfinished homes has inspired a growing protest movement online © press
public refusal to pay toward unfinished homes has inspired a growing protest movement online

Chinese state regulators vowed to help local governments complete unfinished property projects after 100-plus delayed housing projects reported mortgage defaults in recent days.

The state-run Global Times reported that the public refusal to pay toward unfinished homes has inspired a growing protest movement online in China whereby citizens pledge to stop mortgage payments toward other unfinished construction projects.

“The China Banking and Insurance Regulatory Commission said on Thursday [July 14] that it will guide financial institutions in risk management under the trends of the market."

"It pledged to keep stability in real estate financing after some homebuyers defaulted on their mortgages as developers delayed deliveries,” the newspaper reported.

Tianmu Media, based in eastern China’s Hangzhou city in Zhejiang province, reported:

“More than 100 real estate projects in 18 provinces, including South China’s Guangdong Province and Central China’s Henan and Hunan provinces, make up a list of projects exposed to mortgage defaults."

“Developers involved in these unfinished projects include cash-strapped China Evergrande Group and Sinic Holdings, according to analysts and media reports,” Reuters reported on July 14.

“Up to 1.5 trillion yuan ($220 billion) of mortgage loans are linked to unfinished Chinese residential projects, ANZ estimated in a report,” according to the news agency.

ANZ is a financial services company based in Australia and New Zealand.

China’s recent spate of mortgage defaults has inspired an online protest movement in recent weeks in which homebuyers waiting on unfinished housing projects have threatened to stop paying their own mortgages until developers resume construction of the pre-sold apartments and homes.

“The ‘stop mortgage repayment’ movement has spread to more than 100 property projects across several Chinese provinces,” AsiaFinancial.com reported on July 14.

Reuters noted on Thursday:

“The number of developments affected by protests grew from fewer than 20 at the start of this week to over 100 by mid-week, according to media reports and analysts, who see the number doubling by the weekend."

One of the Chinese provinces affected by the emerging mortgage defaults is Henan.

The province made international headlines this week after its capital.

Zhengzhou, was the site of a roughly 1,000-strong protest by people demanding that several rural branches of China’s central bank release millions of dollars in deposits frozen in April without explanation.

The demonstration took place outside the Zhengzhou branch of the People’s Bank of China on July 10.

Security personnel associated with the bank and police officers cracked down on the protest through physical violence, reportedly injuring several participants.

The People’s Bank of China issued a series of statements on July 11 claiming that “customers with deposits of 50,000 yuan (about $7,400) or less would be reimbursed.

They said others with larger bank balances would get their money back at a later, unspecified date,” the Associated Press reported on July 12.

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tags: China | Banks
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