# Analysis-China property financing tweaks fall short of investor expectations Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-11-12 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: China Stays Firm on Property Borrowing Curbs Amid Industry Crunch Meta Description: Stay informed on China's property market fluctuations, financing tweaks, and regulatory updates amidst concerns over liquidity crunch and debt contagion. URL: https://financedigest.com/analysis-china-property-financing-tweaks-fall-short-of-investor-expectationshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-11-11t120051z1lynxmpehaa0q5rtroptp4china-property-debt-regulations-1-1736837387165-compressed.jpg) BEIJING (Reuters) – China will stand firm on policies to curb excess borrowing by property developers even as it makes financing tweaks to help home buyers and meet “reasonable” demand amid an industry liquidity crunch, say bankers and analysts. Investors are worried about wider contagion from the property sector which has seen a string of missed offshore debt payments and sell-offs in shares and bonds as China Evergrande Holdings, the world’s most indebted developer, repeatedly lurches to the brink of default. On Thursday, stocks rose as investors snapped up battered property shares, heartened by Evergrande’s last-minute coupon payment and bets on a potential relaxation of curbs on finance in the sector after data showed a surge in October mortgages. State media also reported that developers and a [bond market industry group discussed potential debt](https://www.financedigest.com/green-bonds-are-set-to-drive-corporate-esg-debt-out-of-slump-in-2023-barclays.html "Green bonds are set to drive corporate ESG debt out of slump in 2023 -Barclays") issuance by developers in the inter-bank market, in what would be an easing of restrictions. But there is little evidence that rules to contain a debt build-up in a sector – including related businesses – that [accounts for a quarter of the world’s second largest economy](https://www.financedigest.com/the-sharing-economy-whats-in-it-for-accountants.html "THE SHARING ECONOMY: WHAT’S IN IT FOR ACCOUNTANTS?"), will be pared back. There are absolutely no fundamental changes or relaxations on the property lending caps,” said a banker at a state lender in [Beijing who declined to be named as they are not authorised to speak](https://www.financedigest.com/in-beijing-spanish-pm-urges-xi-to-speak-with-ukraines-zelenskiy.html "In Beijing, Spanish PM urges Xi to speak with Ukraine’s Zelenskiy") to media. But there’s always leeway for lenders to adjust for themselves to reflect the latest guidance of ‘meeting the normal [financing needs’](https://www.financedigest.com/7-finance-career-options-to-consider-and-what-you-need-to-know-about-each.html "7 Finance Career Options to Consider and What You Need to Know About Each") of both home buyers and developers. Many developers including Evergrande, have grown desperately short of cash since authorities last year unveiled the “three red lines” – a [key policy](https://www.financedigest.com/key-fed-official-sees-rates-liftoff-in-2023-as-policy-debate-heats-up.html "Key Fed official sees rates liftoff in 2023 as policy debate heats up") of President Xi Jinping that imposes limits on liabilities-to-assets, net debt-to-equity, and cash-to-short term borrowing ratios. Authorities have also slapped lending restrictions on mortgages to deter speculative home buying that has driven up [prices and exacerbated an affordability crisis for city dwellers struggling to get on the property](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") ladder. CLEARING BACKLOG While some banks have accelerated disbursement of approved [home loans](https://www.financedigest.com/home-equity-made-simple-things-to-know-before-applying-for-loans.html "Home Equity Made Simple – Things to Know Before Applying for Loans") in some cities, no fresh wave of new approvals has been granted, bankers recently told Reuters. In a departure from its practice of releasing mortgage data on a quarterly basis, the central [bank on Wednesday issued a one-line statement to announce that new mortgage loans had jumped 40% in October from the previous month to 348.1 billion](https://www.financedigest.com/first-abu-dhabi-bank-could-renew-35-billion-offer-for-stanchart-bloomberg-news.html "First Abu Dhabi Bank could renew billion offer for StanChart -Bloomberg News") yuan ($54.5 billion). However, the amount was just 7% higher than the monthly average in the first nine [months of the year](https://www.financedigest.com/independent-study-finds-infinidat-storage-can-provide-customers-125-roi-over-three-years-and-payback-in-less-than-six-months.html "Independent Study Finds INFINIDAT Storage Can Provide Customers 125% ROI Over Three Years and Payback in Less than Six Months"). We’re making flexible adjustments in line with the market situation, but the general direction will not change,” said Zong Liang, [chief researcher at Bank](https://www.financedigest.com/deutsche-bank-names-eigendorf-new-chief-sustainability-officer.html "Deutsche Bank names Eigendorf new chief sustainability officer") of China, one of the country’s biggest state lenders. Our goal is very clear – we want to maintain steady development of the [property market](https://www.financedigest.com/2017-spanish-property-market-gems-kyero-com-gazes-into-the-crystal-ball.html "2017 Spanish property market gems – Kyero.com gazes into the crystal ball"), and our policy adjustments are based on the economic situation,” he told Reuters. Some lenders had held back issuance of home loans earlier in the year, wary of being [accused of fuelling debt bubbles as regulators](https://www.financedigest.com/polish-regulator-accuses-t-mobile-of-misleading-advertising.html "Polish regulator accuses T-Mobile of misleading advertising") were cracking down on new borrowing by developers, the bankers said. There is no increase in (loan) quotas, but the [pace of loan disbursement has been picking](https://www.financedigest.com/property-investors-pick-up-the-pace-surrenden-invest-reports.html "Property investors pick up the pace: Surrenden Invest reports") up,” said a banker at a state lender in Shanghai. In early September, China’s banking [watchdog said banks should offer financial support for home](https://www.financedigest.com/g20-watchdog-homes-in-on-decentralised-finance-after-ftx-crash.html "G20 watchdog homes in on decentralised finance after FTX crash") buyers with “rigid” demand, referring to those recently married or seeking low-cost housing. Banks should implement differentiated mortgage polices and down-payment requirements, the China [Banking and Insurance Regulatory Commission also said at the time](https://www.financedigest.com/ogrady-to-return-to-bank-of-ireland-as-ceo-irish-times.html "O’Grady to return to Bank of Ireland as CEO – Irish Times"), avoiding inflexible rules that penalise non-speculative, legitimate home buyers. We hope to maintain steady and sustainable development of the property sector, and do not want excessive tightening or one-size-fits-all tightening to affect normal [business activities and normal property](https://www.financedigest.com/the-importance-of-property-care-looking-after-your-business.html "The Importance of Property Care: Looking After Your Business") developers,” Wang Jun, chief economist at Zhongyuan Bank, told Reuters on Thursday. “Now, we are trying to correct over-tightening. We should ensure normal start and completion of projects, otherwise there could be impact on home buyers and suppliers. ($1 = 6.3916 Chinese yuan renminbi) (Reporting by Kevin Yao, Cheng Leng, Zhang Yan and Samuel Shen; Writing by Ryan Woo; Editing by Tony Munroe and Emelia Sithole-Matarise) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---