China Has a Worse Mortgage Problem Than the U.S.

Here’s the some inverted reassurance: One Chinese academic told the South China Morning Post today’s’ that China’s mortgage market is in even worse shape than the U.S. sub-prime market.

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.”

Damn Chinese. It’s not enough for them to have the largest IPOs — they also have to have an even more screwed up mortgage market.

[via Reuters]

Related posts:

  1. Cross-National Comparison of Mortgage Markets
  2. Realtime Mortgage Market Carnage, Foreclosure Hype, etc.
  3. The Mortgage Problem in Two Sentences
  4. Fun China Market Factoid: Four Trading Accounts a Second
  5. China: Protectionism vs Politics

Comments

  1. Lee D says:

    Not to be a total downer here, but if their banking sector has the same kind of controls and oversight as their manufacturing industry, then they’re completely screwed, and I commented thusly on my site.

  2. Even scarier about China is that there is an even greater belief there than here that the real estate market can only go up. Check out this excellent post on Global Voices on the housing frenzy there. http://www.globalvoicesonline.org/2007/08/13/china-chongqing-home-buyers-cheated/

  3. mike says:

    I wonder when we’ll see the first execution of Chinese loan officer–to show the world they care as much about lending standards as they do drug manufacturing quality.