China scrambles to defuse alarm over mortgage boycotts and banks runs
By Laura He, CNN Business
18 July 2022
Hong Kong (CNN Business)China is trying to ease panic over two of the biggest issues threatening social stability in the country—mortgage boycotts and frozen bank accounts.
On Sunday, the China Banking and Insurance Regulatory Commission urged banks to increase loan support for real estate developers so they can complete unfinished projects, as thousands of disgruntled homebuyers are staging a mortgage boycott across the country.
In China, real estate firms are allowed to sell homes before completing them, and customers have to start repaying mortgages before they are in possession of the new property. These funds are used to finance construction by the developers.
The payment boycott comes as a growing number of projects have been delayed or stalled by a cash crunch among property developers. Evergrande defaulted on its debt last year, and several other companies are seeking protection from creditors.
Home prices are also falling, putting some buyers underwater: They may be locked into a property that is now worth less than they agreed to pay, making them anguished about meeting their mortgage payments.
Buyers across 18 provinces and 47 cities had stopped making payments by last Wednesday, according to multiple state media reports and data compiled by Shanghai-based research firm China Real Estate Information Corporation.
