(Yicai) Dec. 5 -- Chinese borrowers who made use of affordable business loans during the Covid-19 pandemic to purchase housing are expected to have trouble renewing their loans in 2025 amid falling house prices.

The illegal practice of using low-interest business loans to repay mortgages peaked last year, an industry insider said to Yicai, predicting that the year 2025 will be the peak of loan renewal because such corporate loans tend to mature in three years.

Despite being illegal, some real estate brokerages helped certain borrowers obtain business loans after the government lowered the rates during the pandemic more than once.

A person working in finance in Shenzhen said to Yicai that he covered part of his mortgage which carries a 6 percent interest rate with a business loan of 3.8 percent early last year. However, the business loan expires in 2025.

The evaluated price of the Shenzhen finance professional's house has dropped to CNY8.5 million from CNY10 million (USD1.2 from USD1.4 million) early last year. The bank gave him a loan of around CNY7 million or 70 percent of the original value. Thereby, in 2025, he is likely to only receive a loan of CNY6 million so he needs to fill a gap exceeding CNY1 million in other ways.

When selling prices of second-hand houses fall, appraisal prices of homes tend to fall in tandem. In Shenzhen, prices of houses for sale in popular areas have declined by 5 percent to 50 percent this year, according to data from real estate brokerages.

Editors: Tang Shihua, Emmi Laine