2014-08-27

More Chinese Media Coverage Of Jingle Mail

Some highlights: Guangzhou's Panyu district court has seen mortgage related cases increase 77% over last year; Wuxi has seen a 100% increase. Jingle mail is most common among real estate speculators, not home owners. This is both a good and a bad sign, considering there are estimates of 50 million empty homes.

There's also a comparison of the U.S. housing bubble and China, explaining China's situation is very different due to factors such as high down payments. As I've pointed out previously, China's subprime doesn't appear in liar loans to individual home buyers, it appears in places such as rehypothecated copper and credit guarantees. Chinese businessmen will buy homes solely to use as collateral for otherwise very expensive or impossible to obtain business loans. A 70% down payment on that property only shows a small slice of the total credit attached to the property. Prior discussion here and here.

From QQ Finance:
调查称弃房断供多为炒房者 房产资不抵债将被追讨
BEIJING, Aug. 27 (by real estate channel Lu Xiao Xiao) Recently, on the "abandoned house off for," the report continued, Hangzhou, Wenzhou, Wuxi, Jiangsu, Fujian Ningde, Jiangsu Xinyi, Guangzhou and other places have appeared abandoned house off for the case. Survey shows that appear abandoned house off investors for multiple reasons are mostly due to the "inability to pay."

Experts said the high cost of personal disposable housing foreclosures, not only was the auction house, when the value of the house is not sufficient to pay off the debt, the owners will repay the remaining payments. In addition, to ensure the financial security that banks tend to be more rigid credit policy requirements.

Abandoned house prices fell insolvent off for cases continue

Since May of this year, prices began to turn down by inflation, and continued into the downstream channel. Prices continued to fall, individual owners have begun to lose confidence. When the buyers found the hands of the market value of the house is also not worth the debt owed to the bank, "default" has become helpless choice.

According to media reports, Hangzhou, Wenzhou, Wuxi, Jiangsu, Fujian Ningde, Jiangsu Xinyi, Panyu, Guangzhou and other places exposed how broken for cases from the abandoned house.

According to the Guangzhou Panyu District Court, from between January 2013 to January this year, a year and a half, Panyu court received a total of 191 disputes mortgage loans, an increase of 76.85%.

So, so far Wuxi Chong'an District People's Court of core data, from January to June 2013 received a loan dispute for personal financial loans have 183, which does not involve the mortgage maturity also has 61; 2014 1- June personal finance loans dispute borrowing soared to 367, involving housing loans also increased maturity not yet 98.

Bank credit lax auditing mostly abandoned house off for real estate speculators

According to "Beijing News" reported that abandoned house off for the majority of investors who, for the reasons expressed abandoned house off for "inability to pay", which involves mostly large apartment listings, property owners, mostly by major economic changes, Before or buy on the repayment ability of the estimated incorrectly.

Mortgage loan defaults phenomenon also reflects the problem of lax auditing of bank credit. From the practical point of view, a lot of banks to the buyers of the evaluation process, often face lax scoring to assess the value of water in the case, a lot of income buyers also have the case of fraud.

Shanghai E-House Real Estate Institute researcher Yan Yuejin said that even if house prices fall, or will it just be the crowd repayment schedule, because buyers just need to live in a house is bought, prices or not has little effect on property value. The investment is necessary to consider the price factor, when the inputs and outputs are not symmetrical, abandoned housing foreclosures has become a choice for most investors.

Chinese Academy of Social Sciences Institute of Urban Development and Environment former director Feng Shui Niu real estate channel in an interview, also said BEIJING, broken or poor return most of the real estate speculators capital chain will use the break to resolve on their own for the economy crisis. To get the benefits of real estate at the same time also brings the risk of falling house prices.

Expert: China abandoned house style is different from the United States will not be broken for a large scale

Real estate loans accounted for the majority of individual home loans, according to data provided by Centaline Property Research Center, as of the end of June this year, the balance of personal loans to purchase 10.85 trillion yuan, the country as a whole, individual housing loans accounted for 67% of the real estate loans .

Centaline Dawei analysis, principal analyst, once abandoned house off for default risk spread, it will make a significant increase in bad debts, and even the impact of the entire financial system, does not exclude the occurrence of financial risk in 2007 the United States subprime mortgage crisis even as large.

But the reality does not seem serious to such a degree, the Department of Housing and Urban Policy Research Center, the main Renqin Hong, on a recent economic forum, on the situation in China and the United States real estate situation when the real estate bubble burst were compared. She spoke of the United States in 2006 the United States was a serious inflation, the government sharply pranayama, two Neijizhunli rate rose to 5.5 percent from 1 percent. To make use of floating rate home loans to those who want to repay interest on bank loans increased exponentially, families unable to pay the mortgage, so a lot of families choose outages, this bubble burst. Compared to the United States, zero down payment, while China has the world's highest down payment, the family bought the first house down payment is 30 percent, down payment to buy a second home in most areas to reach 60%, Beijing and a few other cities two suites down payment to reach 70 %, the third suite does not loan, which means that China risk personal loan to buy a house down there is little supply.

Dawei also believes that for ordinary buyers, house prices to fall at least 40%, buyers have to face the possibility of the remaining amount of the loan exceeds the value of the house may occur. Now, in addition to individual regions Wenzhou, the possibility of large-scale emergence of this phenomenon is relatively small.

Industry: real estate auction is not sufficient to repay the bank will continue to collect the debt

And the United States abandoned house off for a different style, from a legal point of view, abandoned house off the donor does not mean giving up the property to put all debts shirk.

Dawei said that the bank will be sued, asking the courts to enforce property owners auction, the proceeds of the property if the auction is often insufficient to pay off these costs, as well as the right to continue to the owners of the bank to recover the money has not been repaid, can also be made to the court other property owners were enforced. In fact, outages is simply for personal bankruptcy.

"Break even for the lender will seriously affect personal credit." Dawei that "breaking the bank for the owners will be banned class of customers, their personal credit record system in the central bank credit will be severely damaged, future life for individuals and business activities will generate many obstacles, and later apply for loans or even credit cards, will not be approved. "

Expert: more stringent credit approval bias rigid demand

In addition, with the increase in abandoned house off for cases from the point of view of the bank, commercial bank credit assets deteriorate, but this is only a partial phenomenon, yet large-scale, global problems. In this regard, the bank also had to make a warning.

China Banking Regulatory Commission Chairman Shang Fulin in the first half of the banking regulatory work conference and analyst meeting on economic and financial situation, "said housing prices in some areas have emerged even breach the owners, some of the small room rate of capital chain tension, the four-tier credit risk associated with the city need attention. "

May 12, central bank vice governor Liu Shiyu chaired a symposium on housing finance services, also mentioned the priority to meet people for the first time to buy housing loan demand, considering the financial sustainable, risk management and other factors, reasonably determine the first suite loan interest rates.

Yan Yuejin said that for commercial banks in terms of the extent of future prudent credit approval will increase, not to put too much money into the mortgage credit market, the future needs of the limited financial resources to guide buyers just need, rather than speculative buyers.

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