Mike Martins

Jul 13, 2022 Chinese Homebuyers Across 22 Cities Refuse to Pay Mortgages

(Bloomberg) -- Across China, homebuyers are refusing to pay mortgages as property developers drag on construction projects, escalating the country’s real estate crisis and risks of bad debt for banks.

Buyers of 35 projects across 22 cities have decided to stop paying mortgages as of July 12 due to project delays and a drop in real estate prices, Citigroup Inc. analysts led by Griffin Chan wrote in a research report distributed on Wednesday.

The payment refusals underscore how the storm engulfing China’s property sector is now affecting the country’s middle class, posing a threat to social stability. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.

Now is “a critical time for social stability,” said Chan, adding that “the forgoing of down payments may bring social instability.”

A drop in home values hasn’t helped. Average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years, according to Citigroup’s research.

The contagion is spreading to banks. Non-performing loans triggered by the wave of mortgage payment snubs could reach as much as 561 billion yuan ($83 billion), about 1.4% of the outstanding mortgage balance, according to Chan.

While the overall impact on banks will be “manageable,” state lenders including China Construction Bank Corp., Postal Savings Bank of China Co. and Industrial & Commercial Bank of China Ltd. may have more exposure to mortgages, and could suffer setbacks amid dampened investor sentiment, Chan wrote.

Explained: Why are bank runs rising in China?

Depositors of four rural banks in Henan province have not been able to withdraw their funds since April. Sporadic protests have been going on since May.

In a rare large protest in China, over one thousand angry bank depositors, who have been protesting for access to their frozen funds, faced off with the police in Henan province leading to a violent clampdown Sunday.

Depositors of four rural banks in this central province have not been able to withdraw their funds since April. Sporadic protests have been going on since May.

After Sunday’s protest, China’s banking regulator announced that customers – with deposits up to 50,000 yuan – will start getting their money back beginning Friday. The arrangement to repay others is yet to be announced. What led to the cash crisis at these rural banks, and what it indicates about the Chinese economy?

China Looks To Reboot Its Economy With $220 Billion In Bond Sales

By ZeroHedge - Jul 10, 2022, 10:00 AM CDT

China’s economy has struggled under its zero-Covid policy.

In a move to kickstart its slowing economy, China considering allowing local governments to sell as much as $220 in “special” local bonds.

"The bond sales would be brought forward from next year's quota," according to people close to the matter.

Chinese are busy looking up ‘What does declaring bankruptcy mean’ after Sri Lanka crisis

As the massive protest in Colombo made headlines worldwide, the news spread across Chinese state media and social media platforms. Sri Lanka declaring national bankruptcy and the resignation of President Gotabaya Rajapaksa were the most discussed topic on Chinese social

Mirrored from https://www.youtube.com/watch?v=Lcp7rNGuiU0