China asks banks to fund housing projects over mortgage boycotts

China asks banks to fund housing projects over mortgage boycotts

Roger Pettingell Sarasota Real Estate

Hong Kong | China’s banking regulator has asked lenders to provide credit to eligible developers, so they can complete unfinished residential properties after home buyers stopped paying mortgages on at least 100 projects across 50 cities.

The guidance from the China Banking and Insurance Regulatory Commission was issued in response to the mortgage boycotts and is aimed at expediting the delivery of homes to buyers, a newspaper published by the watchdog reported on Sunday, citing unidentified senior officials at the agency.

An estimated 70 per cent of the country’s middle-class wealth is tied up in property. Getty

The move comes after regulators met with banks last week to discuss the growing number of consumers who have decided against paying their mortgages, the latest threat to a key industry already battered by defaults among some of the country’s biggest builders. State media have cited analysts warning that the stability of the financial system could be hurt if more home buyers follow suit.

Meanwhile, the China Banking and Insurance News’ report said that the regulator had urged banks to support mergers and acquisitions by developers to help stabilise the real estate market. Banks were also asked to improve communications with home buyers and to protect their legal rights, the report said.

Though commercial banks have called the situation controllable in public statements, concerns have persisted given the importance of the sector.

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