It is spreading like wildfire. Homebuyers in China are refusing to pay the mortgage on properties they’ve bought but that their financially strapped developers can’t finish. Some say that they will only resume payments when construction restarts.
The protest involved more than 100 delayed projects as of July 13, up from 58 projects just one day earlier. The frustrated buyers accuse the developers of misusing sales proceeds and the banks of failing to safeguard their loans.
China’s economy, which is on course to record its lowest quarterly growth rate in two years, is facing fresh risks from an unfolding mortgage boycott quickly spreading across the country.
In the past week, buyers of more than 230 properties in 86 cities have joined together to collectively refuse to make mortgage payments for unfinished, pre-sold units unless construction resumes, according to real-time updates on software development platform Github under the “WeNeedHome” project.
HONG KONG, July 14 (Reuters) – Chinese regulators on Thursday vowed to help local governments deliver property projects on time after homebuyers threatened to stop mortgage payments on unfinished apartments, in the first sign Beijing was stepping in to end the market chaos. The homebuyers’ threats have deepened investor concerns about the property sector, which accounts for a quarter of the economy. Investors also worry about banks, rattled over the past year by developers’ cash squeeze and some debt defaults.