Chinese officials are reportedly pressuring banks to approve new loans to private property developers more quickly to alleviate cash shortages.
According to those in the know, this move is to stimulate homebuyer sentiment, which may negatively impact lenders' asset quality.
China's Real Estate Market Has Seen Many Crises
As new house prices declined for an eighth consecutive month in February, Beijing's newest support tool to ease the sector's extraordinary liquidity pressure and boost home purchases is the "whitelist" system.
Introduced in January, the "whitelist" allows local governments to submit acceptable residential projects to banks for financial assistance and work with them to satisfy project demands.
Beijing has repeatedly urged major domestic banks to increase their lending exposure to the crisis-hit sector, but they have avoided doing so so far. This ends the prospects of a rebound in an industry vital to the economy.
The world's second-largest economy's real estate sector has experienced repeated crises since a liquidity crisis in 2021 brought about by a government crackdown on developers' excessive borrowing.
Banking Regulator Urges Faster Home Loan Approvals
According to Reuters' sources, the banking regulator has recently demanded quicker loan approvals for residential projects under the "whitelist" system.
According to developers and bank records, banks have hesitated to lend money to new real estate projects. Instead, they have been extending the terms of existing loans and reducing their interest rates.
One source added that the "whitelist" initiative includes projects funded by the state or private developers that require new funding of 1.5 trillion yuan ($207.51 billion). Another person said the regulator mandated last week that banks complete the approval and issue of all loans by the end of June.
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