On November 7, 2014, Caixin published an article on bad loans in the first half of 2014. The article stated that 90 percent of the bad bank loans in Sichuan Province were residential loans.
Back in September, the China Banking Regulatory Commission, Sichuan Office, ordered banks under its jurisdiction to conduct internal audits of their residential loans. The result of these internal audits showed that, from January to June of 2014, nonperforming loans made by banks in Sichuan Province increased to 277 million yuan, of which 247 million yuan were residential loans. These loans accounted for about 90 percent of the total nonperforming loans, representing a 79 percent increase compared to the previous year.
This was not an isolated case. As the economy has slowed down, defaults on housing mortgages have been rising throughout China due to reduced family income or declining business. For example, in Erdos Inner Mongolia, where people walk away from their investment houses when the housing price goes down, bad residential loans reached 500 million yuan in August 2014.
Source: Caixin, November 7, 2014