The Chinese real estate market continues to be sluggish, causing significant impacts on related industries. In the first half of the year, the total personal housing loan balance of 42 listed banks decreased by 319.1 billion yuan compared to the beginning of the year. At the same time, the default rate continues to rise due to some homebuyers defaulting on their payments, drawing market attention.
According to Wind data, in the first half of the year, the total personal housing loan balance of the 42 listed banks exceeded 34 trillion yuan. Among them, the six major state-owned banks had a combined personal housing loan balance of over 26 trillion yuan, accounting for 77% of the total among the 42 listed banks.
The highest personal housing loan balance still belongs to the Construction Bank, at 6.31 trillion yuan, followed by the Industrial and Commercial Bank of China with 6.17 trillion yuan. Among the commercial banks, only China Merchants Bank and Industrial Bank had personal housing loan balances exceeding 1 trillion yuan in the first half of the year, totaling 1.38 trillion yuan and 1.07 trillion yuan respectively.
According to a report by the First Financial, the trend of decreasing housing mortgage loans has extended from 2023 to 2024. In 2023, the scale of housing mortgage loans of the 42 listed banks shrank for the first time, decreasing by 546.7 billion yuan compared to the previous year. In the first half of this year, the total housing mortgage balance of the 42 listed banks decreased by 319.1 billion yuan compared to the beginning of the year, with the six major banks collectively decreasing by 311.9 billion yuan.
In terms of percentage, state-owned banks decreased by 0.82% compared to the beginning of the year, commercial banks decreased by 1.26%, and regional banks decreased by 1.77%.
Among the 42 listed banks, only 13 banks achieved a net increase in personal housing loans in the first half of the year.
Reports indicate that based on the financial reports of various banks, listed banks have generally increased their investment in housing mortgages and improved service experiences. However, due to sluggish real estate sales, early repayments, and other factors, the new loan volume has shrunk.
While mortgage assets are shrinking, the default rate continues to rise.
Wind data statistics found that among the 42 listed banks, 21 banks disclosed the non-performing loan rate for personal housing loans for the half-year period, with 19 of them showing varying degrees of increase. On average, the average non-performing loan rate for housing loans of the 21 banks increased by 0.1 percentage point.
Taking China Citic Bank as an example, the non-performing loan rate for personal housing loans was 0.71%, an increase of 0.21 percentage points from the end of the previous year; the attention loan rate was 0.30%, rising by 0.05 percentage points from the end of the previous year. China Citic Bank stated that the increased non-performing loan rate and attention loan rate were affected by factors such as sluggish real estate sales and slowing economic growth.
This topic immediately drew market attention.
Chief Financial Economist of the China Finance Think Tank, Professor Honghao, wrote: “Why is the default rate increasing? One reason is the decline in house prices, which leads to the down payment being lost after buying a house. Some people find it pointless to continue repaying the loan and thus default. Another situation is when household income problems arise, making it impossible to pay the mortgage and leading to defaults.
Moreover, why are housing mortgage loans decreasing? It is related to some people making early repayments. Everyone wants to avoid carrying high interest payments every day, so they repay the loan whenever they have money, leading to people saving rather than spending.”
Economist and author of “Financial Technology,” Yufeng Hui, said: “We have to admit that the ‘golden age’ of the real estate market seems to be fading away, with enthusiasm for buying houses significantly decreasing. Coupled with the uncertainty of the economic situation, people are tightening their wallets and not rushing to take out loans to buy houses. Consequently, the housing loans in banks are also shrinking.”
Investment content creator and financial blogger Lin Yun commented: “The housing loan volume of listed banks has shrunk by over 300 billion in half a year, and the default rate is climbing. Considering that the negative impact of the real estate industry on the banking sector is far from over. In the medium term, the drastic reduction of the real estate industry will force the banking sector to passively reduce its scale, leading to a decline in asset quality. In other words, the lid is not enough to cover the pot.”
Some netizens also shared their personal experiences: “The down payment is gone, the principal and interest over these years have become worthless, and the current selling price is not enough to repay the bank loans. No one knows what they have been through all these years, or how long they can hold on.” “I haven’t received a salary for two months. Borrowing money to repay housing loans, I can’t hold on without pay anymore.” “I have stopped repaying, and I immediately feel relieved.”