The six major banks' outstanding personal mortgage balances have decreased by 0.7 trillion yuan. Is it still necessary to repay the loan early?

Reporter | Zhao Jingzhi (每经记者｜赵景致)   
Editor-in-Chief | Wei Guanhong (每经编辑｜魏官红)

Has the trend of prepaying mortgages ended?

Since the second half of 2022, individual mortgage borrowers in China have accelerated early repayment of loans and gradually formed a “prepayment boom” over a period of time.

But now, scenes like grabbing appointment slots before dawn and lining up for months are no longer common. Is the “prepayment trend” of early mortgage repayment still continuing? 《Daily Economic News》’s reporters compiled data and found that the outstanding balance of personal mortgages at China’s six major state-owned banks is about 24.48 trillion yuan, down by about 0.71 trillion yuan year over year.

“There is certainly still early repayment of mortgages now, but compared with the past few years, it definitely can’t be called a ‘boom’ anymore.” Wang Pengbo, chief analyst at Bocom Consult, said that the decline in outstanding mortgage balances is jointly caused by residents’ early repayment of loans and the fact that last year’s homebuying intention was not high.

It is worth noting that this year’s first quarter saw a “brief spring” in the real estate market. Senior financial policy expert Zhou Yiqin believes this is not a short-term rebound after a deep oversold drop; rather, as market interest rates are gradually lowered and housing policies are gradually relaxed, market confidence is being steadily restored, and this trend has the potential to continue into the second quarter.

Decline in personal mortgage balances in 2025

Reporters compiled data and found that banks’ outstanding balance of personal housing loans is still falling.

In 2024, as the main force in issuing mortgages, the personal housing loans of the six major state-owned banks decreased by 0.62 trillion yuan; and across all of 2025, the net reduction was 0.71 trillion yuan, with the decline widening compared with 2024.

It is worth noting that in the first half of 2025, the six major state-owned banks’ total reduction was 107.8 billion yuan, clearly lower than the 325.5 billion yuan reduction in the first half of 2024; but in the second half of 2025, it fell sharply by about 602.2 billion yuan, causing the overall contraction of personal mortgages last year to further expand compared with 2024.

As the outstanding balance of personal mortgages keeps shrinking, the personal housing loan balances of all six major state-owned banks have all moved on from the “trillion-yuan era of 6 trillion.”

From the national big-picture view, personal housing loan balances are also trending downward. According to data from the PBOC, at the end of 2025 the national outstanding balance of personal housing loans was 37.01 trillion yuan, down 1.8% year over year. This indicates that for some banks, the outstanding balance of personal housing loans has even increased, and that bank competition in personal mortgage lending has entered a stage of more refined competition.

In the industry’s view, the decline in the balance of stock mortgages is essentially a game between two forces: one is how much is “pulled out” through early repayments, and the other is how much new mortgage lending is “put in” through new issuances.

“There is certainly still early repayment of mortgages now, but compared with the past few years, it definitely can’t be called a ‘boom’ anymore.” Wang Pengbo said that early mortgage repayment combined with residents’ low homebuying intention last year results in bank personal mortgage balances decreasing due to the combined effect of the two factors.

Yang Haiping, a special research fellow with the Beijing Wealth Management Industry Association, said that real estate is still in an adjustment period. There are many households with urgent demand, but there are also many households that are watching and waiting; overall, growth in mortgage lending remains lackluster.

A “brief spring” arrives in the real estate market in the first quarter

In the first quarter of this year, the domestic market for secondhand housing transactions saw a “brief spring.” According to the report from Centaline? (Ke Rui), in March, the transaction area of secondhand homes in China’s top 20 key cities was about 17.97 million square meters, up 117% month over month, and also up 6% year over year; the total transaction area in the first quarter was about 41.08 million square meters, up 4% year over year.

In this “brief spring” phase, first-tier cities such as Beijing and Shanghai played the role of “trailblazers.”

“The ‘brief spring’ in the real estate market in the first quarter of 2026 is mainly driven by a recovery in the secondhand housing market in first-tier cities. It is currently at a stage of mild repair, and its rebound momentum may have some continuity.” Zhou Yiqin told reporters that as the “brief spring”行情 comes, the positive impact on the outstanding balance of personal housing loans at commercial banks will gradually become apparent.

“Although a full reversal has not been achieved, I believe this is not a short-term rebound from a deep oversold situation. Instead, as market interest rates are gradually lowered and housing policies are gradually relaxed, market confidence is being steadily restored. I think there is hope it will continue into the second quarter.” Zhou Yiqin said that active secondhand home transactions will directly boost the number of mortgage applications, gradually slowing the rate of decline in balances. In the future, it is expected to provide positive support for mortgage balances; overall, the real estate market is moving toward a direction of “rising volume and stabilizing prices.”

Yan Yuejin, deputy dean of Shanghai E-Ju Real Estate Research Institute, said to reporters: “This ‘brief spring’ focuses more on secondhand housing transactions in key cities. The market is still in the early stage of national real estate recovery. If the market transactions improve further in the second quarter, it will also provide positive support for the mortgage market. However, some customers use公积金 loans (公積金贷款), which won’t be captured in commercial bank mortgage data, and it will also affect commercial mortgage balances.”

Banks say mortgage loan applications have shown a clear increase in volume

Regarding personal mortgage loans this year, reporters noticed that executives at several banks also made statements at earnings briefings. Among them, Bank of Communications expressed a relatively optimistic view of its personal mortgage business.

At Bank of Communications’ 2025 annual earnings briefing, Vice President Zhou Wanfu said that since March 2026, the bank’s mortgage loan application volume has increased noticeably. “This should be a signal that the real estate market is stabilizing.” Zhou Wanfu said that if this trend continues, Bank of Communications’ mortgage business in 2026 will gradually achieve positive growth, and also help the bank’s entire retail lending to meet the expected growth target.

Vice President Wang Jingwu of Industrial and Commercial Bank of China responded to the non-performing loan ratio for consumer loans (個人貸款不良率). Wang Jingwu said that the bank’s personal loan asset quality has long remained excellent. Over the past two years, due to factors such as economic transformation, adjustments in the real estate market, and periodic imbalances between supply and demand, the non-performing loan ratio has risen somewhat in the short term, consistent with the overall industry trend.

“The fundamentals of China’s economy are stable, its resilience is strong, and its potential is large. The long-term favorable support conditions and the underlying trend have not changed. In the future, risks in personal loan business will remain controllable.” Wang Jingwu judged that as a package of policies speeds up implementation and policy dividends continue to be released, the foundation of the personal credit market will gradually improve, and the asset quality of personal loan business will return to a reasonable level.

Although the state has continued to issue policies regarding real estate and the market has also shown signs of recovery, Yang Haiping said to reporters that the proportion of mortgage loans in banks’ asset allocation may be on a declining trend.

Based on current data, reporters noticed that large banks’ personal consumption loans and personal business loans have achieved significant growth. Among them, Industrial and Commercial Bank of China’s personal consumption loans increased by 244.8k yuan, up 18.5%; its personal business loans increased by 7.1k yuan, up 15.0%; and the growth rate of personal consumption loans in the Mainland at Bank of China reached 28%.

Is prepaying a mortgage worth it?

Previously, the main drivers of the “mortgage prepayment boom” were borrowers. On the one hand, due to economic fluctuations; on the other hand, due to increased volatility in China’s financial markets, with stock and fund prices falling significantly. As a result, ordinary residents’ investment returns declined noticeably and risk appetite became more conservative. In addition, some existing mortgage loan interest rates were on the high side—some borrowers had stock mortgage rates exceeding 5%. Driven by these factors, borrowers used some of the funds originally intended for investment to prepay their loans.

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

With interest rates at a low level, is it still worth it to prepay personal loans?

“Whether it’s worth it depends on consumers’ current investment or savings return levels, and how big the difference is versus the mortgage interest rate after the cut.” Wang Pengbo said. If the investment return rate is higher than the loan interest rate, then you can consider putting more funds into investment; otherwise, you may consider repaying part or all of the loan. In addition, you also need to set aside funds for daily living expenses and future retirement and medical needs.

Also, regarding repayment methods: generally speaking, under the equal principal repayment method, borrowers repay more principal and less interest in the early period; compared with that, prepayment is a bit more worthwhile. Under the equal principal-and-interest repayment method, borrowers pay more interest and less principal in the early period; and if the repayment has passed the halfway point, you can also choose not to consider prepayment.

Cover image source: Daily Economic News media database (每经媒资库)