China Banking and Insurance Regulatory Commission has urged lenders to offer loans to help eligible struggling property developers complete their unfinished housing projects, reported South China Morning Post.
This move comes as an increasing number of homebuyers are withholding mortgage payments on incomplete housing projects across cities, reported AgenceFrance-Presse.
Banding together, homebuyers reportedly have stopped payments for already sold units in a minimum of 100 housing projects, according to data from industry groups.
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CBIRC’s move is expected to open the liquidity for the first time since a cap has been imposed on central bank loans in August last year, which has pushed the property sector into problems.
Banks are required to work with local authorities to offer enough liquidity to property developers to help in the completion and handing over of the units, based on compliance with the law and market principles, according to a report published in the China Banking and Insurance News, which is run by CBIRC.
It is estimated that there are around 220 incomplete residential projects across more than 80 cities.
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Expressing confidence, CBIRC stated with concerted efforts, “all the difficulties and problems will be properly solved”, reported the China Banking and Insurance News.
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By GlobalDataBloomberg reported that mortgage holders may be given a ‘payment holiday’, a move that would enable them to halt repayments temporarily without impacting their credit score.
It is still not clear if the lenders can absorb the cost of the strike on mortgage payments, which is impacting an estimated 100 projects spread across 50 cities.
The value of the residential mortgages amounts to $300m (CNY2bn), according to data from the banks on Friday, according to a Bloomberg report.
The country’s property sector has been facing crisis since the gradual collapse of Evergrande commenced in 2021.
This sector accounts for up to 30% of the country’s economic output, reported The Guardian.
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Image: Homebuyers reportedly have stopped payments for already sold units in a minimum of 100 housing projects in China. Credit: wal_172619 from Pixabay.
