HONG KONG (Reuters) - The quality of Chinese home loans is worse than in the United States, where a subprime mortgage crisis is causing turmoil in global financial markets, according to a prominent academic quoted in a Hong Kong newspaper on Sunday.
Yi Xianrong, a banking and finance expert at the Chinese Academy of Social Sciences, said Chinese banks had been lax as they built up 3 trillion yuan ($396.2 billion) of mortgage lending.
Defaults in the U.S. subprime mortgage market now total about $200 billion, on some $1 trillion of loans, according to Credit Suisse.
“The quality of housing loans are much worse than the subprime loans in the United States,” Yi was quoted as saying by the South China Morning Post.
“At least there has been a credit check system (in the United States) but in China anyone can borrow money to buy a house.”
China’s property market has been booming thanks to a hunger among a fast-growing middle class for new apartments, but the government has been wary of rampant speculation in major cities, particularly Shanghai.
Fearing a dangerous bubble could be forming, authorities have tried several measures to try to cool the market, including interest rate rises, rules to curb foreign investment in property, and steps to encourage construction of cheaper homes.
more>>>>
China’s mortgage quality worse than U.S.: academic
reuters.com/article/ousiv/id … 2?rpc=401&