By Dai Yan (chinadaily.com.cn)
Updated: 2007-09-20 15:41

Default rates are getting higher on personal housing mortgage loans in China, according to a report released by the China Construction Bank (CCB), although it stressed the country now does not have a typical subprime loan market.

In recent years, non-performing personal housing loans have mounted in China, said the report.

Statistics show that personal housing loans in the Industrial Commercial Bank of China, the Bank of China, and CCB rose to 1.18 trillion yuan (US$157 billion) at the end of 2006 from 1.01 trillion yuan at the end of 2005. Meanwhile non-performing loans jumped to 19.24 billion yuan from 18.44 billion yuan.

It usually takes three to eight years for risks in personal housing loans to surface. The report noted that domestic commercial banks are entering a high-risk period in terms of defaults on personal housing loans, as the central bank has been raising interest rates frequently and payments for mortgage loans continue to rise.

Fake mortgages and bank mismanagement both led to the housing mortgage loan risk. Banks should strengthen efforts in credit confirmation and raise the dawn payments for those buying more than one house, the report said.