A Homebuyers' Boycott in China

People who took out mortgages for unfinished housing say they won’t pay

It started as an act of protest by fed-up apartment buyers in a single project in a city in central China. Now tens of thousands of people around the country are withholding payments on their mortgages for homes that developers, including China Evergrande Group, have yet to finish.

The wildcat boycott on loans worth as much as 2 trillion yuan ($296 billion) threatens to deepen a real estate slump by shifting focus from China’s embattled property companies to its huge banks. Lenders have relied on mortgages as a safe source of revenue as Covid-19 lockdowns stifle growth.

Policymakers are on alert. They’ve urged banks to boost lending to builders to help finish projects, and officials are even considering giving homeowners a grace period on payments, according to people familiar with the matter. One bank after another has assured investors that risks are controllable and that their exposure to the delayed projects is small, even as a gauge of lenders’ stocks declined before partially recovering.

The protests are intensifying a crisis that Beijing appeared to have under control, in spite of the wave of defaults by Evergrande and other developers in recent months. The property market was beginning to stabilize, with sales jumping last month over those in May. The chairman of one of the biggest developers said the market had bottomed out.