Commercial banks in China are focusing on optimizing their financial services to make it easier for homebuyers to make early repayments on their mortgages. Officials from the China Banking and Insurance Regulatory Commission have acknowledged the challenges in handling early mortgage repayments and have noted that banks are implementing measures to improve processing times and increase the number of early repayments.
Homebuyers are showing increased willingness to make early repayments on their mortgages, and banks are responding to this demand with specialized service plans and procedures, as well as dedicated hotlines for early mortgage repayments. Some banks are even allowing homebuyers to make appointments for early repayments through mobile banking and other online channels, which has improved service efficiency.
One of the reasons why homebuyers are making early mortgage repayments is because the returns on wealth management products (WMPs) are lower than their mortgage rates. With the yields on WMPs continuing to decline, investors have been redeeming their investments, prompting them to consider early repayment options.
In the last few months of 2022, some WMPs experienced fluctuations in net asset value due to economic factors such as improved expectations and rising bond yields. However, regulators have noted that these fluctuations have been mostly under control, and the market has stabilized, with the net asset value of some WMPs recovering significantly.
In response to these developments, the CBIRC plans to continue guiding commercial banks to provide real estate financial services in accordance with contractual agreements, as well as unblocking online channels for early mortgage repayments and accelerating the approval process. Additionally, the CBIRC will strengthen its supervision of violations of business loan usage and the illegal flow of consumer loans into the real estate sector.
Overall, banks’ efforts to optimize their services and make it easier for homebuyers to make early repayments on their mortgages will benefit both lenders and borrowers. Lenders will have lower risks of default, while borrowers will have greater financial flexibility and the ability to save on interest payments.