China: rush to repay the mortgage, before the economic storm arrives
In China, thousands of borrowers are in a hurry to pay off their mortgages early , amid falling consumer confidence in the country's economy and fears of being indebted in the midst of a recession. this also has repercussions in an important reduction of the new family debt. After all, at the moment, the stock market is in sharp decline, with the benchmark index CSI 300 which has lost more than 20% this year, so getting rid of the mortgage seems to be the best way to invest your money.
"This trend is the result of people lacking faith in macroeconomics and preferring to reduce debt when they can," said Harry Hu, senior director of S&P Global Ratings.
The data released by some banks give an idea of this trend that seems almost unstoppable:
the Industrial and Commercial Bank of China recorded 260 billion yuan (37 billion euros) of individual mortgage prepayments in the first half of this year, 13% more than the previous year, said Vice President Zheng Guoyu during the bank's results briefing in September.
A similar trend was observed by the Agricultural Bank of China. "A small portion of our clients choose to prepay their mortgage due to personal financial planning and declining investment returns at this stage," Vice President Lin Li said at a press conference last month to discuss the results. of the bank. The bank did not provide figures.
According to data from the People's Bank of China (PBOC), in the first eight months of 2022, new medium and long-term net loans to households – which represent an approximation of mortgages – fell by 54% to 1.97 trillion yuan. compared to the previous year. After all, the economic slowdown is also evident in China, with GDP that is no longer growing as it once did, and no one wants to be in the situation of paying the mortgage and, perhaps, losing their job. Therefore, several families have "given themselves" the escape from debt, perhaps even just by anticipating several installments.
Few consider that the mortgage is also trust in the future, so if families do not make debt it is because they do not expect to be able to improve their wealth and, in general, that nothing good will happen. In Italy this has been happening for some time now, but for China it is a new phenomenon.
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article China: rush to repay the mortgage, before the economic storm arrives comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-corsa-al-rimborso-del-mutuo-prima-che-arrivi-la-tempesta-economica/ on Tue, 11 Oct 2022 09:00:29 +0000.