A new and dangerous signal has emerged in China’s financial system as hundreds of house buyers intend to stop repaying loans.
At the end of June, all the buyers of the Evergrande Longting Project in Jingdezhen, Jiangxi Province, issued an open letter. They complained that over 900 houses in the project had been sold since its opening in January 2021. Still, all building was suspended entirely at the end of May 2021, and its supervision funds were exhausted.
Due to the failure to defend their rights many times, the buyers asked the builder to resume the construction before the end of October. Otherwise, they would stop paying loans in November to protect their legal rights.
Subsequently, the house buyers in various places followed suit and jointly announced the suspension of loan payments.
On July 7, all the Wuhan Evergrande Times New City buyers issued a suspension of their loan payment notice. The buyers said that since the project opened for selling on Oct. 15, 2019, nearly 5,000 sales agreements have been signed. The project is overdue by several months, but it is still completely shut down. They demanded that the builder fully resume work by Aug. 1; otherwise, they would suspend their loan payment.
In Henan Province, where depositors at some local rural banks cannot withdraw money, at least more than 30 buyers of housing projects have announced the suspension of payment.
According to incomplete statistics by Beijing News, real estate buyers have issued notices of loan payment suspension in many places. They include Wuhan, Changsha, Nanchang, Shenyang, Suqian, Xianning, Xuchang, Xinxiang, Shangqiu, Zhoukou, Zhengzhou, Luohe, Nanyang, Shaoyang, Suizhou, Shenzhen, and other places.
The buyers believe that the lending banks have problems, such as illegal lending and lax supervision of funds. According to NewTalk, some Chinese lenders have announced their investigations after a wave of house buyers have informed banks and local authorities that they would collectively stop repaying housing loans.
The Agriculture Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China, and other listed banks have announced investigations into real estate projects.
The Agriculture Bank of China announced that it had established an overall coordination mechanism and organized the investigation of the delivery of housing projects in the whole system.
The bank said that the houses are used to accommodate, not to speculate. And it will cooperate with the local authorities to ensure the delivery of housing projects and the stability of financial services, as well as to safeguard the housing market and the legitimate rights and interests of housing consumers.
The China Construction Bank announced that it supports the healthy development of the real estate industry.
These banks raised their voices as the risk of the real estate crisis spread to the financial system.