Date
20 August 2017
Most of the defaulters are speculators who bought apartments during the 2010 price bubble. Photo: Bloomberg
Most of the defaulters are speculators who bought apartments during the 2010 price bubble. Photo: Bloomberg

Mortgage defaults increasing in Chinese cities

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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KZ/RA

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