Homebuyers in China are refusing to keep paying mortgages for unfinished apartments, adding to the cash crunch in the sector that could spread globally

A growing number of buyers in China are refusing to pay their mortgage for apartments that are still under construction, adding to market concerns about the country's real-estate debt crisis.

According to a note released on Thursday, buyers of homes in more than 200 projects in 75 to 80 cities are not paying their mortgage. According to media reports and analysts, this is up from less than 20 projects at the start of the week.

"Pre sales are the most common way of selling homes in China, so the stakes there are high," said analysts in a Wednesday note. Property developers in China can sell homes before they are finished, and buyers need to pay for them before they take possession.

The completion of apartments has been delayed due to the curbs. There has been a decline in buyer sentiment in China. Some developers are starting to accept crops for down-payments.

The cash crunch that started after Beijing cracked down on excessive borrowing by property developers is concerning as the sector is also dealing with non-payments.

Evergrande was forced to default on its debt last year. As banks tightened their lending, this spilled over to other companies. China's real estate and related industries account for 30% of the country's GDP, so any impact would hit the world's second-largest economy hard, and could cause a domino effect on China's financial system.

A disorderly deleveraging may lead to a credit crunch for developers and massive defaults in offshore dollar bond markets, as well as rising non-performing loans for banks, which sit at the center of China's financial system.

According to information from various banks, Chinese banks have more than two billion dollars in loans at risk due to the mortgage payment boycotts. According to people familiar with the matter, Chinese authorities have held emergency meetings with banks to discuss the mortgage boycott. There was no quick fix.

At a time when the Chinese Communist Party is about to hold its 20th National Congress in the fall of 2022, the development comes at a sensitive time for the country.