Chinese Banks Ease Credit Controls in Slowing Property Market
Chinese Banks Ease Credit Controls in Slowing Property Market
(Bloomberg) -- Chinese banks have started to ease credit controls on homebuyers and developers in response to government instructions amid worries about an economic slowdown.
Banks in some areas have accelerated issuing home loans and lowered mortgage rates, while the credit environment for property developers is also improving, the official Securities Times said in a report Friday.
At a meeting last week in Beijing, the People’s Bank of China urged banks to “steadily carry out property lending business and maintain the stable and orderly delivery of real estate credit,” according to a statement released by the central bank late Thursday.
Regulators are seeking to stabilize the country’s all-important property sector after the widening debt crisis at China Evergrande Group and efforts to rein in property speculation combined to crush demand and hit the economy.
China’s Vice Premier Liu He, widely believed to be President Xi Jinping’s right-hand man, said last week that developers’ reasonable funding needs are being met and the property market remains on a healthy course.
Regulators have told some major banks to accelerate approval of mortgages in the last quarter, Bloomberg reported earlier this month. Authorities told financial institutions in late September to cooperate with governments to maintain the steady and healthy development of the real estate market and safeguard homebuyers’ interests.
Economic growth slowed in the third quarter as the property and construction industries contracted for the first time since the start of the pandemic. Home sales fell 16.9% in September and prices dropped for the first time in six years.
Some banks have shortened the time required to approve home loans to one to two months from previous six months, the Securities Times reported. Mortgage rates in some cities have also declined, with those in the southwestern city of Chengdu falling to about 5.6% from 5.8%-6%.
The credit environment for developers is also likely to see improvement in the fourth quarter and the first half of next year, with leading players expected to receive more financial support, according to the report.
The newspaper also sounded a note of caution, saying the steps don’t presage an across-the-board credit easing for the property market nationwide, and the overall policy environment should remain generally tight.
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With assistance from Bloomberg