828cloud

Data, Info and News of Life and Economy

Tag Archives: Mortgage

More Chinese Homebuyers Refuse to Pay Mortgage Loans Amid Contagion Fears

A rapidly increasing number of disgruntled Chinese homebuyers are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system.

Homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, according to researcher China Real Estate Information Corp. That’s up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.

“The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”

The delayed projects make up about 1% of China’s total mortgage balance, according to Jefferies. Should every buyer default, that would lead to a 388 billion yuan ($58 billion) increase in non-performing loans, Chen said. The report didn’t give any estimate for how many buyers are snubbing repayments.

Some major Chinese banks rushed to respond during trading hours on Thursday as the CSI 300 Banks Index fell as much as 3.3%. State-owned Agricultural Bank of China Ltd. said it held 660 million yuan of overdue loans on unfinished homes, while smaller rival Industrial Bank Co. said 1.6 billion yuan of mortgages were impacted, of which 384 million yuan have become delinquent. China Construction Bank Corp., the nation’s largest mortgage lender, said overall risks are controllable as its exposure to delayed projects is small.

The payment refusals underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%.

Analysts believe that a drop in home values may be another driver for the refusal to meet mortgage payments. “Investors are concerned about the spread of mortgage payment snubs to buyers, simply due to lower property prices, and the impact on property sales,” Chen wrote.

Average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years, Citigroup Inc. analysts said in a note on Wednesday. China’s home prices fell for a ninth month in May, with June figures set for release Friday.

The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including Country Garden Holdings Co., the largest builder by sales.

While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.

Presale Risks

Nomura Holdings Inc. analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified.

Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.

“Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Lu wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.

“We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”


Source : Bloomberg


Read Also

Homebuyers in Multiple Cities Go on Mortgage Strike Over Delayed Projects . . . . .

Chart: U.S. 30-year Mortgage Rate Over 6%

Source : Bloomberg

Chart: Changes of U.S. 30-year Fixed Mortgage Rates from First Week of the Decades Since 1971

Source : Freddie Mac

Chart: U.S. 30-year Fixed Mortgage Rose to Multi-year High

Charts: U.S. 30-Yr Mortgage Rate Over 5+ Decades


See large image . . . . . .

Source : Twitter and Trading Economics

Chart of the Day: US Mortgage Applications Week-over-week Crash Most Since 2009

While The Fed cut rates to zero and unleashed unprecedented QE and backstops, mortgage rates have spiked in the last two weeks.

Source : Bloomberg

US Housing Update

Case-Shiler Home Price Index Since 1987


Enlarge chart ….

Case-Shiler Home Price Index vs 30-year Mortgage Rate Since 2013


Enlarge chart ….

Case-Shiler Home Price Index YoY % Change Since2001


Enlarge chart ….

Posted on 2017/05/30.


Mortgage Applications


Enlarge chart ….

Mortgage Refi Index


Enlarge chart ….

Posted on 2017/01/04.


30-year Mortgage Rate and Case Shiller National Home Price Index


Enlarge chart ….

Posted on 2016/12/27.


San Francisco Home Price Appreciation


Enlarge chart ….

Minimum Qualifying Income to Purchase Home


Enlarge chart ….

Posted on 2016/04/06.


New Home Sales and Medium New Home Sales Price


Enlarge chart ….

Posted on 2015/11/25.


Mortgage Purchase Application


Enlarge chart ….

30-year Fixed Rate Mortgage Average


Enlarge chart ….

Posted on 2015/11/12.


MoM Change in Pendng Home Sales Since 2010


Enlarge chart ….

YoY Change in Pending Home Sales Since 2011


Enlarge chart ….

Home Builder Sentiment vs. New Home and Pending Home Sales


Enlarge chart ….

Posted on 2015/10/29.


MoM Change in New Home Sales Since 2005


Enlarge chart ….

New Home Sales vs Home Builder Sentiment


Enlarge chart ….

New Home Sales vs Median Sales Price Since 1990


Enlarge chart ….

Posted on 2015/10/26.


Total New Home Sales vs Median New Home Sales Price


Enlarge chart ….

Posted on 2015/06/23.


Home Ownership Down and Rental Growth Surges


Enlarge chart ….

Posted on 2015/06/09.


Total Housing Starts Since 2005


Enlarge chart ….

MoM Housing Start Seasonal Adjusted


Enlarge chart ….

Posted on 2015/03/17.


Homeownership Rate


Enlarge chart ….

Median Asking Rent Since 1988


Enlarge chart ….

Posted on 2015/03/09.


Disconnect Between New Home Sales and Medium New Home Price


Enlarge chart ….

Posted on 2015/02/25.


Housing Starts: Total and One Unit Structures Since 1968


Enlarge chart ….

Posted on 2015/02/18.


Home Ownership Rate Since 1965


Enlarge chart ….

Posted on 2015/02/03.


Components 0f Residential Investment as Percentage of GDP Since 1959


Enlarge chart ….

Posted on 2015/02/02.


Home Ownership Rate Since 1955


Enlarge chart ….

Household Formation Since 1982


Enlarge chart ….

Posted on 2015/01/30.


Mortgage Application Since 1990


Enlarge chart ….

Building Permits Since 2009


Enlarge chart ….

Housing Start Since 2009


Enlarge chart ….

Posted on 2014/02/19.


The Real Cost of Buying A New Home


Enlarge chart ….

Mortgage Applications Down to 13-year Low


Enlarge chart ….

Posted on 2013/12/24.


Mortgage Application in October 2013 Down to Near the Lowest in 2008


Enlarge chart ….

Posted on 2013/12/04.


Home Ownership Rate Since 1980

Posted on 2013/07/30.


Mortgage Payment Back to 2008 Level

Posted on 2013/07/29.


Total Housing Activity Composite Index


Enlarge chart ….

Posted on 2013/07/26.


New House Sales Increase in June


Enlarge chart ….

Average Home Price Falls


Enlarge chart ….

Posted on 2013/07/24.


Mortgagae Application Going Down

Mortgage Application vs Mortgage Rate and Home Sales

Posted on 2013/07/17.


Sales of New and Existing Homes Since 2000

Posted on 2013/06/27.


Mortgage Down to 19-month Low

Affordable Home Price Is Plunging


Enlarge chart ….

Posted on 2013/06/26.


PHLX Housing Index and Lumber


Enlarge chart ….

Posted on 2013/06/24.


NAHB Index Since 1985

Lumber Price vs National Association of Home Builders Index

Posted on 2013/06/17.


Y/Y % Change of U.S. Sales of Furniture and Furnishing


Enlarge chart ….

Posted on 2013/06/13.


Bank Real Estate Loans Outstanding

MBA Purchase Applications Index


Enlarge chart ….

MBA Refinance Applications Index


Enlarge chart ….

Reis Apartment Vacancy Rate


Enlarge chart ….

Posted on 2013/04/03.


Construction Spending Since January 1993


Enlarge chart ….

Construction Spending YoY Change % Since January 1994


Enlarge chart ….

Posted on 2013/04/01.


New Home Starts, Sales and Residential Investment since January 1968


Enlarge chart ….

Single Family Starts Recovery from Bottom of Downturns


Enlarge chart ….

Single Family Start and Unemployment Rate since January 1968


Enlarge chart ….

Posted on 2012/08/10.

U.S. Mortgage Application and Sales of New Homes

Mortgage Appications Plunge


Enlarge chart ….

Divergence of Mortgage Application and Sales of New Single-family Homes


Enlarge chart ….

Case-Shiller Composite Indices

U.S. Housing Update

U.S. Mortgage Application

Case-Shiller Composite Indices SA, Year-over-year Change


Enlarge chart ….

Case-Shiller Non-seasonally Adjusted 20 City Composite Index


Enlarge chart ….

Nominal House Prices Since Jan, 1976


Enlarge chart ….

Real House Prices Since Jan, 1976


Enlarge chart ….

Price to Rent Since Jan, 1983


Enlarge chart ….

Canadian Housing Mortgage – CMHC

Total CMHC Mortgages Insured

Total CMHC Mortgage Insurance as % of GDP

Y/Y Change of CMHC Mortgage Insurance since 1998 and Forecast to 2016

Canadian Consumer Spending as % of GDP