Rural Land Mortgages Raises Concern: How Can Peasants Pay the Mortgage?

iFeng: 中国试点农村土地抵押贷款 农民偿贷能力引担忧
  Hong Kong media said that China will for the first time allow farmers to their land as collateral for bank loans, which could make China more than 600 million rural residents have the ability to access to credit markets. This is to relax restrictions on land use and financing of part of the effort.

...eople's Bank of China central government move is considered an effort to help reduce the small cities of unsold housing stock. Hai Tong Securities chief economist Li Xunlei said: "Because the income of farmers is very limited, so that the loan is a problem they may use the loan to buy a very expensive city apartment, but then how they repay it.?"

  Li Xunlei said that if the government did not help farmers increase income and strengthen social protection method is found, then this policy may be "defective."

  According to World Bank data, about 46% of China's population live in rural areas.

  Meanwhile, others say the bank will need some time to learn how to handle the new business.

  Jinzeng Xiang said: "The bank will be much willingness for these assets loans it this is a new business, once the loans become bad debts, mortgage housing bank is difficult to cash?."

  He also said that because of the quality of rural housing vary widely, impartial assessment of the value of housing in rural areas will be a challenge. Also unclear whether banks have enough professionals to carry out this business.

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