Financial institutions expected to provide support for property sector

The National Financial Regulatory Administration will strengthen guidance for financial institutions to allow them to make better use of supportive policies to enhance services for the property sector, thereby stabilizing property credit to properly meet developers' funding needs, Xiao Yuanqi, deputy head of the financial watchdog, said at a news conference in Beijing.

Experts said expectations for the property sector will continue to stabilize to provide a solid development base, as policy measures already in place will gradually deliver more benefits under the premise of different regions making good use of independent policy tools.

"We will accelerate the implementation of the financing coordination mechanism for the property sector at the city level so that it will produce early effects," Xiao said, adding that under the mechanism, a list of projects eligible for financing assistance will be provided to financial institutions at the administrative level.

The administration will hold a working conference in the near future to urge banks to take timely action so that with joint efforts from local governments and the housing and urban-rural development authorities, they will meet proper funding needs of real estate projects, he said.

That is to say, based on assessments of property projects and developers using market-oriented and legal principles, financial institutions are expected to proactively meet funding needs of projects that are making smooth progress and have sufficient collateral, reasonable liabilities and guaranteed repayment sources.

Financial institutions are expected to provide support by means of loan extensions, rescheduled repayments and the issuance of new loans for projects that are experiencing temporary difficulties but maintain a basic fund balance, rather than making hasty withdrawals, suspension and withholding of loans.

"There is still room for property policies to exert more effect, and the key is that different regions make better use of supportive policies that are based on their unique property supply and demand conditions in order to stabilize expectations and deliver more policy dividends," said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.

Zhou said that as more property policy effects will be delivered against the backdrop of a stabilizing Chinese economic recovery, the property market will likely also stabilize and expand.

The senior official also said the NFRA will urge financial institutions to effectively implement the new rules announced on Wednesday that expand access to commercial lenders' operating property loans for developers. Such loans are permitted to be used by developers to repay outstanding loans and bonds.

In addition, financial institutions are also urged to continue to provide quality mortgage loan services while strengthening their support for the so-called three major projects that include the transformation of "urban villages".

Data from the administration showed that outstanding developer loans and housing mortgage loans stood at 12.3 trillion yuan ($1.72 trillion) and 38.3 trillion yuan, respectively, to date. In 2023 alone, 3 trillion yuan in developer loans and 6.4 trillion yuan in housing mortgage loans were issued.

At the end of last year, outstanding property developer bonds held by banks totaled 427.5 billion yuan, and their merger and acquisition loans and extensions for outstanding loans to developers topped 1 trillion yuan in 2023.

The official also said at the news conference that the administration will join hands with relevant government departments to steadily promote construction of financial reform pilot zones for sci-tech innovations, deepen financial support measures for manufacturing and guide financial institutions to continuously enrich financial products and services to strengthen support for sci-tech innovation and advanced manufacturing.