Bloomberg reports that according to people familiar with the matter, China is loosening restrictions on home loans at some of its largest banks, adding to signs of growing concern by authorities about contagion from the debt crisis at China Evergrande Group.
Financial regulators told some major banks late last month to accelerate approval of mortgages in the last quarter.
The moves come amid growing alarm that the liquidity crisis at Evergrande is spilling over to other developers as President Xi Jinping maintains harsh measures to cool the property market. Fears of contagion risks intensified over the past two weeks after a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that its default was imminent.
While the latest move is positive for developers, it’s unlikely to resolve their liquidity problems, said Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities. He said regulators should also loosen policies for project loans and onshore corporate bond markets, given that offshore debt financing is “almost shut down at the moment.”