Shadow Lending for Chinese Home Down Payments Prompts Crackdown

  • Housing deposit loans by P2P lenders triple since market rout
  • Some property agents suspend online mortgages ahead of curbs

A construction site in Wuqing. Lending for property down payments, a phenomenon all but unheard of a year ago, has now prompted plans by the government to halt such borrowing.

Photographer: Zhang Peng/LightRocket via Getty Images

When Fu Songtao found his ideal home in the suburbs of Shanghai, he faced the typical problem of would-be homebuyers: Coming up with enough cash for a down payment. So Fu turned to an online solution. His property agent offered him a zero-interest loan, funded entirely online by peer-to-peer lenders, that covered almost half his deposit.

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