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China’s top banking regulator vowed to ensure steady lending to qualified property developers to help resume construction of unfinished projects amid the spreading mortgage boycott crisis.
The China Banking and Insurance Regulatory Commission (CBIRC) will work with the central bank, the housing ministry and local governments to ensure home delivery and social stability, Liu Zhongrui, an official with the regulator’s statistics department, said during a briefing on Thursday.
Banks will meet developers’ reasonable financing needs, he added, the first official remark about the stalled property projects that led to homebuyers suspending mortgage payments.
“All the difficulties and problems will be properly addressed,” he added.
The CBIRC is paying close attention to home delivery delays of a project in Jingdezhen, in southern Jiangxi province, he added without mentioning the growing mortgage boycott across the country over the past couple of days.
As of July 21, homebuyers of more than 300 property projects across the cuntry have made public letters they sent to banks to tell them that they refuse to maker mortgage payments, according to files posted to Microsoft’s collaborative code-sharing platform GitHub. That’s sharply more than around 100 projects hit by the mortgage boycott a week ago.
“Banks must work with local authorities to provide sufficient financing to facilitate the completion and handover of contracted property sales, based on market principles and compliance with the law,” Liu said on Sunday in comments to an article published in the China Banking and Insurance News, a CBIRC publication.
He declined to comment on whether a grace period will be extended to these homebuyers.
China could allow homeowners to temporarily halt mortgage payments on stalled property projects without incurring penalties, Bloomberg reported earlier this week, citing people familiar with the matter.
While it’s unclear what measures the central government is likely to take, a number of local governments have taken steps to assuage the public’s concerns about the potential impact of delays to residential projects. Read more …
Zhengzhou city, capital of central China’s Henan province, is creating a property developer bailout fund as increasing numbers of homeowners join a nationwide boycott of mortgage payments on stalled property projects.
The bailout, one of the first to deal with the intensifying mortgage revolt in the country, will be jointly established by Henan Asset Management and developer Zhengzhou Real Estate Group, according to a statement from the asset manager. The two entities are backed by the financing arms of the local government.
China’s property sector went into a tailspin last year, when the central bank stepped up enforcement of its so-called three red lines on debt limits. That choked off bank funding for companies that were already deep in debt.
Sichuan Languang Development was the first to default last year, missing its payment on a $139 million bond last July. Bond defaults quickly spread to other developers, ensnaring China Evergrande Group, the world’s most indebted developer with around $300 billion in liabilities.
This month, Ronshine China Holdings became the 19th homebuilders that fail to make debt payment, when missed interest payment on an offshore bond, while another six have applied for maturity extensions.
Eighteen, or more than 75% of China’s embattled developers, have more than one residential project that has been delayed anywhere from six months to more than a year.