China urges banks to extend loans for real estate projects amid mortgage boycott

• The China Banking and Insurance Regulatory Commission (CBIRC) made its comments.
• After an increasing number of homebuyers threatened to quit paying their mortgages for stalled real estate projects.
• CBIRC urged banks to “assume social responsibility” and aggressively take part in the research of funding gap-filling strategies.

In their most recent attempt to allay concerns raised by a growing mortgage-payment boycott on unfinished homes, Chinese regulators on Sunday urged banks to extend loans to eligible real estate projects and accommodate developers’ financing needs when acceptable.

The China Banking and Insurance Regulatory Commission (CBIRC) made its comments after an increasing number of homebuyers in China threatened to quit paying their mortgages for stalled real estate projects, worsening an economic crisis already caused by the real estate market.

Even though the CBIRC pledged on Thursday to tighten its coordination with other regulators to “ensure the delivery of homes,” investors have continued to sell Chinese banking equities as well as developer shares and bonds.

The CBIRC reaffirmed its commitment to helping local governments expand home delivery in an interview with the official China Banking and Insurance New on Sunday. The CBIRC also expressed confidence that, with coordinated efforts, “all the challenges and problems will be correctly solved.”

More specifically, the regulator urged banks to “assume social responsibility” and aggressively take part in the research of funding gap filling strategies in order to quickly resume building on stopped real estate projects and deliver homes to buyers early.

In order to help stabilise the real estate market, it also advised banks to improve their interactions with mortgage clients and support the purchase of real estate projects.

The watchdog added that although financial risks have been rising recently in the northeastern province of Liaoning, they were still under control, and that the government will take action to avert hazards at China’s small lenders.