The six major banks' outstanding personal mortgage loan balances decreased by over 700 billion yuan last year.

（Source: Caixin）

          With interest rates at a low level, whether it is cost-effective to prepay a mortgage depends on the investment return and the repayment method.            

On April 6, according to a report from the Daily Economic News, as of the end of 2025, the total outstanding personal housing loan balance of the six state-owned major banks is about 24.48 trillion yuan, down by 0.71 trillion yuan from the previous year. The balance continues to decline, as all have exited the “trillion-yuan era of 6 trillion yuan”. In 2024, the six banks’ mortgage loans decreased by 0.62 trillion yuan; in 2025, the decline widened. Of this, the decrease in the second half was about 602.2 billion yuan, which pushed the full-year decline to be larger. Data from the People’s Bank of China show that the national outstanding balance of personal housing loans at the end of 2025 was 37.01 trillion yuan, down 1.8% year over year, and the industry has entered a stage of refined, more granular competition.

Tongbo Consulting’s chief analyst Wang Pengbo said that prepaying mortgages still exists, but it is no longer a “trend”; it is the result of prepayment and weak homebuying demand acting together. Yang Haiping, a special research fellow at the Beijing Wealth Management Industry Association, said that the real estate market is still in an adjustment period, and the growth of mortgage loans is lackluster.

This year’s first quarter saw a “small spring” in the real estate market. In the focused 20 cities, in March, the transaction area of existing homes increased 117% month over month and 6% year over year; for the first quarter cumulatively, it rose 4%, with Beijing and Shanghai leading the recovery. Zhou Yiqin pointed out that market confidence is being restored steadily, not rebounding in the short term. The second quarter is expected to continue, and increased activity in existing home sales will support the number of mortgage loan applications, easing the trend of balance declines.

Zhou Wanfu, deputy president of Bank of Communications, said that since March 2026, the number of mortgage loan submissions has risen noticeably, possibly signaling that the market has stabilized and could help drive positive growth in mortgage-lending business. At the same time, large banks have seen a significant increase in consumer and operating loans. Industrial and Commercial Bank of China’s consumer lending increased by 77.819 billion yuan (+18.5%), and business/operating loans increased by 252.238 billion yuan (+15.0%). Meanwhile, Bank of China’s consumer lending increased by 2.8 billion yuan.

The People’s Bank of China data show that in February, the weighted average interest rate on newly issued personal housing loans was about 3.1%, down 10 basis points from the same period last year, meaning interest rates are at a low level. Wang Pengbo said whether prepayment is cost-effective needs to be compared in terms of investment returns and the current loan interest rate, and judged comprehensively by the repayment method—equal principal and interest (more principal in the early period) or equal principal and interest (more interest in the early period). At the same time, it is necessary to ensure provisions for living expenses and future spending reserves.

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