Individual mortgage defaults are rising in some Chinese cities amid falling property prices, 21st Century Business Herald reported Thursday, citing industry sources.
Some banks in several cities sued homeowners in May and June over the soured loans. These included lenders in Hangzhou in Zhejiang province and Wuxi in Jiangsu province, Ningde in Fujian province and Xinyi in Jiangsu province
Most of the borrowers are speculators who bought apartments at the height of a price bubble in 2010 and started to default on the loans in 2013 when property prices slumped, the report said.
The properties are underwater, a term used to describe assets that are worth less than the mortgage. Typically, their owners prefer default to refinancing, leaving them to creditors for disposal.
Last month, Shang Fulin, chairman of the China Banking Regulatory Commission, warned of credit risk related to the property market, especially in third and fourth-tier cities.
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