It also highlights, however, how mortgage rate cuts and other measures to aid China's faltering property sector, hit by a slump in demand and a cash crunch at major developers, have yet to deliver a meaningful recovery, even asshow the market is stabilising. Analysts expect a recovery will only kick in towards the second half of this year.
About 17.7 trillion yuan of mortgages, nearly half the current outstanding total, were granted between the fourth quarter of 2017 and the first quarter in 2022 at relatively high rates of 5.26% to 5.72%, said Judy Zhang, a banking analyst at Citigroup. Zhang wrote in a recent note that heavy prepayments could persist for higher-rate mortgages, knocking up to 5% off Chinese banks' earnings this year in a worst-case scenario.
Some banks have tried to stem the tide of prepayments by adding red tape and slowing the processing of applications, forcing some borrowers to wait for months for approvals, local media have reported. The rush of prepayments has continued into this year, with the dull outlook for returns on investments such as stocks and bonds also encouraging cash-rich borrowers to pay off debts, said Nicholas Zhu, a banking analyst at Moody's.
The regulators said they would step up investigations and penalties for the misuse of business and consumer loans, according to the report.
It is of great benefit to home buyers and is conducive to promoting the recovery of the real estate market.
Oh My God, Big problem.