Bank of Communications' U-turn on early mortgage repayment charges
Bank of Communications has deleted a notice about adjusting early repayment charges, probably "due to numerous complaints."
On Monday, China's fifth largest bank issued an announcement on its official website about adjusting the compensation fee for early repayment of private mortgage and personal online mortgage loans (consumption).
The fee can be collected on certain conditions such as multiple early repayment within one year or early repayment request before an agreed lock-up period that cause noticeable loss of interest rates for banks.
According to the announcement, BoCom, starting from November 1, would charge for early repayment of private mortgages (including personal loans for housing, mercantile occupancy, and factory premises) and personal online mortgage loans (consumption), with the compensation fee set at the equivalent to 1 percent of the early-repaid part of the principal sum.
The notice triggered widespread market concerns, and the bank was found to have deleted the announcement on Tuesday, which "could be due to numerous complaints, but the exact reason is unclear," according to a customer service staffer.
China's "Big Four" banks, namely, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and the Bank of China, all said that they don't currently charge compensation for early mortgage repayment, according to the Economic View.
Dong Ximiao, chief researcher at Zhongguancun Internet Finance Institute, said that few banks charge for early repayment in practice, and reckoned that other banks will not follow BoCom's example.
"Personally, I don't think this practice is encouraged in the current environment," industry insider Wang Jianhui said, also believing such a move will not become common, Jiefang Daily reported.
The choice on whether or not to charge for early repayment depends on the circumstances of each bank, such as the sufficiency of funds and location, Wang noted.