Early Mortgage Repayment in China: Why Banks Are Blocking You

Note: This content is specific to the Chinese banking system.

In most countries, banks are happy to get their money back. In China, since 2023, a strange phenomenon has emerged: banks are actively preventing customers from paying off their mortgages early.

With investment returns falling (stock market volatility, low wealth management product yields), many Chinese families have decided that the best investment is to pay off their 4-5% mortgage debt. This "wave of repayment" has caused panic in the banking sector.

The Obstacles You Will Face

If you try to make a lump-sum prepayment on your mortgage in China today, you might encounter:

1. Long Waiting Lists: Banks are imposing quotas. You may apply today and get an appointment for 3 to 6 months later. During this time, you are forced to keep paying full interest.
2. Disabled Apps: Many banks have removed the "Early Repayment" button from their mobile apps, forcing you to visit a branch physically to apply.
3. Penalties: While technically many contracts allow free prepayment after 1 year, some branch managers might try to bluff about penalties or "breach of contract" fees to dissuade you.

Why is this happening?

It's about Net Interest Margin. Chinese banks pay very low interest on deposits but earn healthy interest on existing mortgages. If you repay your loan, the bank gets cash back that it can't easily lend out again at such a high rate in the current economic climate. Your mortgage is their "golden goose," and they don't want to lose it.

Strategy: How to Pay Off Faster

1. Book Immediately: Do not wait until you have the full amount. Book your appointment slot in the app or branch as soon as possible to get in the queue.
2. Complain to CBIRC: If the bank delays unreasonably (e.g., more than 30 days if your contract says 30 days), filing a complaint with the China Banking and Insurance Regulatory Commission (CBIRC) often resolves the issue instantly. Banks fear regulators.
3. Check Your Contract: Read the fine print. If it says "prepayment allowed after 1 year with 30 days notice," the bank has no legal ground to make you wait 6 months.

👉 China Mortgage Calculator: See how much interest you save