Have the six major banks reduced their existing personal mortgage balances by 7k yuan; is it still necessary to repay the loan early?

Ask AI · Why does the personal mortgage balance shrink in the “small spring” of the housing market?

Meiri Reporter: Zhao Jingzhi Meiri Editor: Wei Guanhong

Has the trend of early mortgage repayment ended?

Since the second half of 2022, borrowers of China’s personal housing loans have accelerated repayment, gradually forming a “prepayment wave” for a period of time.

But now, scenes of grabbing appointment numbers at midnight and queuing for months are no longer common. Is the “prepayment trend” of early mortgage repayment still continuing? The Daily Economic News reporter compiled data and found that the total outstanding personal housing mortgage loans of China’s six largest state-owned banks are about 24.48 trillion yuan, down by about 0.71 trillion yuan from the previous year.

“Early repayment of mortgages is definitely still happening now, but compared with the past few years, it definitely can’t be called a ‘wave’ anymore.” Wang Pengbo, chief analyst at Bocomm Consulting, said that the decline in mortgage balances is jointly caused by residents’ early repayments and the fact that last year’s home-buying intentions were not high.

It is worth noting that this year’s first quarter saw a “small spring” in the housing market. In this context, Zhou Yiqin, a senior expert on financial policies, believes this is not a short-term oversold rebound; rather, as market interest rates are gradually lowered and home-purchase policies are gradually relaxed, market confidence is steadily recovering, and there is hope that this trend will continue into the second quarter.

2025 Personal Mortgage Balance Declines

Data compiled by the reporter shows that bank personal housing loan balances are still falling.

In 2024, as the main force in mortgage issuance, the six largest state-owned banks reduced personal housing loans by 0.62 trillion yuan; and in 2025, the net reduction for the whole year was 0.71 trillion yuan, widening the drop compared with 2024.

Notably, in the first half of 2025, the combined reduction by the six largest state-owned banks was 107.8 billion yuan, down significantly from 325.5 billion yuan in the first half of 2024. However, in the second half of 2025, the reduction jumped sharply by about 602.2 billion yuan, further expanding the overall shrinkage of personal housing mortgages compared with 2024.

As personal mortgage balances continue to be reduced, the personal housing loan balances of the six largest state-owned banks have all moved on from the “6-trillion-yuan era.”

From the national big picture, personal housing loan balances are also trending downward. According to data from the People’s Bank of China, at the end of 2025, the nationwide personal housing loan balance was 37.01 trillion yuan, down 1.8% year on year. This shows that the personal housing mortgage balances of some banks have even increased, and that banks’ personal housing mortgage businesses have entered a stage of more refined competition.

Industry insiders believe that the decline in outstanding stock mortgage balances is essentially a tug-of-war between two forces: one is how much has been “withdrawn” through early repayments, and the other is how much new mortgage lending has been “added” through fresh issuance.

“Early repayment of mortgages is definitely still happening now, but compared with the past few years, it definitely can’t be called a ‘wave’ anymore.” Wang Pengbo said that early repayment of mortgages combined with residents’ low home-buying intentions last year, together, led to a reduction in banks’ personal mortgage loan balances.

Yang Haiping, a specially invited researcher at the Beijing Wealth Management Industry Association, said that the real estate sector is still in an adjustment period. There are many groups with genuine demand, but there are also many people taking a wait-and-see approach. Overall, the growth of mortgage lending remains weak.

A “Small Spring” Arrives in the First Quarter of the Housing Market

In this year’s first quarter, the mainland China secondary housing transaction market saw a “small spring.” According to a report by CRIC, in March, the transaction area of second-hand homes in 20 key cities was about 17.97 million square meters, up 117% month on month and up 6% year on year; the cumulative transaction area in the first quarter was about 41.08 million square meters, up 4% year on year.

In this “small spring” upswing, first-tier cities such as Beijing and Shanghai played the role of “leading the way.”

“The ‘small spring’ in the first quarter of 2026 in the housing market is mainly driven by the secondary home market in first-tier cities. It is currently in a mild recovery phase, and the warming trend may have some continuity,” Zhou Yiqin told reporters. He added that with the arrival of this “small spring” upswing, the positive impact on commercial banks’ personal housing mortgage balances will gradually become apparent.

“Although a full reversal has not yet been achieved, I believe this is not a short-term oversold rebound. Instead, as market interest rates are gradually lowered and home-purchase policies are gradually relaxed, market confidence is steadily recovering. I believe there is a possibility it will continue into the second quarter,” Zhou Yiqin said. He pointed out that active second-hand home transactions will directly boost the number of mortgage applications, gradually slowing the decline in balances. In the future, it is also expected to provide positive support for mortgage balances, and the overall housing market is moving toward the direction of “more volume with stable prices.”

Yan Yuejin, deputy director of the Shanghai E-House Research Institute, told reporters that this “small spring” focuses more on second-hand home transactions in key cities. The nationwide housing market is still in the early stage of recovery, and the market transactions in the second quarter are expected to further improve, providing positive support for the loan market. “However, some customers use provident fund loans, which are not counted in commercial bank loan data, and will also affect commercial mortgage balances.”

Some Banks Say Mortgage Application Volume Has Increased Significantly

Regarding this year’s personal mortgage situation, the reporter noted that management teams at multiple banks also made statements at their earnings briefings. Among them, Bank of Communications has a relatively optimistic outlook on its personal mortgage business.

At the Bank of Communications’ 2025 annual earnings briefing, Vice President Zhou Wanfeng said that since March 2026, the bank’s mortgage application volume has increased significantly. “This should be a sign that the real estate market is stabilizing.” Zhou Wanfeng said that if this trend continues, 2026’s mortgage business will gradually achieve positive growth, and that it will also help the bank meet its overall retail loan growth target.

ICBC’s Vice President Wang Jingwu responded to concerns about consumer loan non-performing rates. Wang Jingwu said that the asset quality of the bank’s personal loan portfolio has long remained excellent. In recent years, due to factors such as economic transition, adjustments in the real estate market, and phased supply-demand imbalances, non-performing rates have risen slightly in the short term, consistent with the overall industry trend.

“Our country’s economy has a solid foundation, strong resilience, and great potential. The long-term favorable support conditions and the basic trend have not changed, and personal loan risks are controllable.” Wang Jingwu judged that as a package of policies is implemented at an accelerated pace and policy dividends continue to be released, the foundation of the personal credit market will gradually improve, and the quality of personal loan assets will return to a reasonable level.

Although the state has continued to introduce policies regarding real estate and the housing market has shown signs of warming, Yang Haiping told reporters that the proportion of mortgages in banks’ asset allocation may be a downward trend.

Based on current data, the reporter noted that big banks’ personal consumer loans and personal business loans have achieved significant growth. Specifically, ICBC’s personal consumer loans increased by 778.19 billion yuan, up 18.5%; its personal business loans increased by 2522.38 billion yuan, up 15.0%; and Bank of China’s domestic personal consumer loans grew by 28%.

Is Early Mortgage Repayment Worth It?

Previously, the main drivers behind the “early repayment wave” of housing loans were borrowers. On the one hand, due to economic fluctuations; on the other hand, because volatility in China’s financial markets intensified, with prices of stocks, funds, and other assets falling sharply. As a result, ordinary residents’ investment returns declined noticeably and risk appetite became more conservative. In addition, some outstanding mortgage loans have relatively high interest rates; for some borrowers, their existing mortgage rates exceeded 5%. With these factors combined, some borrowers redirected part of the funds originally used for investment toward early repayment.

However, as interest rates on outstanding mortgages are lowered, the cost of personal housing loans is gradually decreasing. According to PBOC data, in February this year, the weighted average interest rate on newly issued personal housing loans was about 3.1%, roughly 10 basis points lower than the same period last year, with loan interest rates remaining at a low level.

With interest rates at a low level, is early repayment of personal mortgages still worth it?

“Whether it’s worth it depends on the level of a consumer’s current investment or savings returns, and how large the difference is compared with the mortgage interest rate after the rate cut.” Wang Pengbo said. If the investment return rate is higher than the loan interest rate, then you may consider allocating more funds to investments; otherwise, you can consider repaying the loan partially or in full. In addition, you also need to ensure sufficient funds for daily living expenses and for future retirement and medical needs.

Also, regarding repayment methods, generally speaking, under the equal-principal repayment method, more principal is repaid and less interest is paid in the early stage, so early repayment is somewhat more cost-effective. Under the equal-principal-and-interest repayment method, more interest and less principal are paid in the early stage. If repayment has already passed the halfway point, you may also not need to consider early repayment.

Daily Economic News