The China Banking and Insurance Regulatory Commission (CBIRC) confirmed on Thursday that it will provide “active credit support” to developers so they can complete delayed or stalled projects as soon as possible.
He also urged banks to issue more mortgages to qualified homebuyers to support demand and support the real estate market.
“The current lending pace of real estate-related loans has reached the highest pace since 2019,” Liu Zhongrui, a CBIRC spokesman, said at a press conference Thursday in Beijing.
Last month, new developer loans issued by banks also reached 52.2 billion yuan ($7.7 billion), Liu added.
This pledge is the latest in a series of appeasement steps by the Chinese authorities. a riot of homebuyers across the country.
A growing number of disgruntled homebuyers are refusing to pay mortgages on unfinished projects, exacerbating the country’s real estate problems and raising concerns about systemic financial crisis
as well as social instability.
This movement is a sign that the liquidity crisis faced by developers is spreading to other aspects of society.
Problem started in 2020
when Beijing began to crack down on developers’ over-borrowing in an attempt to curb their high debt and curb runaway housing prices. A crisis escalated last year
when Evergrande – the country’s most indebted real estate developer – struggled to raise cash to pay off creditors. As the real estate sector cools down, several big companies seeking protection from creditors.
Many real estate projects across the country have been delayed or suspended due to lack of funds from developers.
Public outrage over stalled projects is growing as many homebuyers have started paying off their mortgages before they own new properties. In China, real estate firms are allowed to sell houses before completion and use the funds to finance construction. it the most common way
or sale of houses in the industry.
A mortgage boycott could trigger a rise in NPLs at banks and further dampen sentiment in the real estate sector. according to analysts
. If sales decline further, developers could face more severe cash problems, which could lead to more debt defaults and project delays, creating a vicious cycle in the market. The real estate crisis will also put a serious strain on the economy and financial system, with real estate and related industries accounting for up to 30% of China’s GDP.
Earlier this week, China’s central city of Zhengzhou set up a developer bailout fund to deal with pending projects, one of the first steps to help local governments fight a mortgage boycott.
The fund will be jointly established by Zhengzhou-based Henan Asset Management and Zhengzhou Real Estate Group. statement
asset manager on Tuesday. Zhengzhou is the capital of the central province of Henan and is currently at the center of a nationwide mortgage boycott.
Both companies are supported by the provincial local authorities.
The fund will be used to “revive troubled real estate projects and rescue developers,” the statement said, but did not disclose how large the fund would be.