BEIJING, (Reuters) – Some Chinese banks have accelerated the disbursement home loans in certain cities. This relief is for cash-strapped builders who want to close sales. However, no new credit is currently being released amid a strong regulatory push to reduce sector leverage.

Authorities are not interested in genuine buyers being shut out or delays in developers receiving their payments as a result of slow loan disbursements. This is a critical market for the health and prosperity of the country.

After the People’s Bank of China’s (PBOC), last month’s criticisms of some banks’ “misunderstanding” of the bank’s debt-control policies for the property sector, Disbursement also took over.

Reuters reported that some lenders held off on issuing home loans in early 2017 because they were concerned about being charged with creating debt bubbles during a period when the state was tightening its grip on developers who had borrowed too much.

The new January central bank restrictions that cap banks’ property loans also led to a decline in loan issuance

Beijing’s banker claimed that banks had increased their quotas of homebuyers by not breaking the mortgage loan cap requirements. The regulators were supportive to buyers who are in rigid demand.

A private survey on Monday showed that new home prices only barely increased in October due to weak demand in major metropolitan areas.

According to a Shanghai banker, his branch had accelerated mortgage handouts during the third quarter. However, authorities reminded his bank that they remain strict about illegal lending to the industry.

According to another Shanghai banker, “The mortgagequota has not been increased but mortgage is being issued faster.”

A slowdown of mortgage approvals has partially contributed to financial stress for developers, such as the China Evergrande Group.

As cash flow is decreasing, developers fail to finish their projects. This has led to widespread complaints by home buyers, and has put a damper in new sales.

SHORTER WAIT

According to a Shanghai-based realtor, Liu (respectively Liu), “The wait time for mortgage approval is now shorter than it was six months ago.”

Zhang Dawei (chief analyst at Centaline property agency) said that loan approvals were also faster because there are fewer homeowners waiting to be approved.

According to Cailianshe’s Thursday report, which cites unidentified sources, October saw banks grant 150 billion to 200 billion yuan (31 billion dollars) more property loans than September.

Analysts noted a rapid increase in residential mortgage-backed security (RMBS) issues by banks. This suggests that banks have another route to capital raising as they borrow money to homeowners.

Huatai Securities reported that the September issuances of local RMBS totalled 77.9 billion yuan.

After a two month halt, the issuers resumed issuing and increased by a substantial amount. This we view as (regulatory), guidance.

Central bank data revealed that outstanding mortgage loans had reached 37.37 Trillion Yuan ($5.84 Trillion) as of September 30, 2018.

($1 = 6.4006 renminbi)