China increases its efforts to help developers get loans in the face of a mortgage boycott.

(Reuters) – SHANGHAI/BEIJING ,As Chinese regulators stepped up their efforts to get lenders to give loans to qualified real estate projects, This was because a growing boycott of mortgage payments on unfinished houses posed new risks to an already troubled property market.

On Sunday, the official industry newspaper reported that the China Banking and Insurance Regulatory Commission (CBIRC) said that banks should meet developers’ reasonable financing needs.

The China Banking and Insurance News said that the CBIRC was confident that if everyone worked together, “all the problems and difficulties will be properly solved.”

The comments come as more and more homebuyers in China have said they won’t pay their mortgages for stalled property projects, which would make a real estate crisis that has already hurt the economy even worse.

Some of the recent losses in banking and real estate stocks were made up for by the latest news. Last week, China’s banking index fell by 7% to a level that hadn’t been seen in more than two years. On Monday morning, however, it rose by more than 1%. On the mainland, Chinese real estate stocks went up by more than 2%, and in Hong Kong, they went up by almost 5%.

The rise in Chinese banking stocks was also helped by the news that China will speed up the release of special local government bonds to help small banks get more capital. This is part of China’s plan to lower risks in the sector.

Official data released on Friday showed that the property sector’s output fell by 7 percent in the second quarter compared to the same time last year. This is the fourth straight quarter that output has gone down.

State television CCTV reported on Monday that new loans for real estate in June were expected to be worth more than 150 billion yuan ($22.23 billion). This is a big change from May, when the number of new loans fell.

Mark Dong, co-founder and general manager of Hong Kong-based Minority Asset Management, said, “I think the Chinese government has the will and the means to solve the problem and will likely act quickly.”

“The biggest risk is a drop in consumer confidence, which could hurt the sales of homes that are just starting to get better.”

DESPERATE FOR STABILITY

Dong thinks that state-owned developers will step in and buy troubled projects from their private peers who have a lot of debt, which will speed up the consolidation of the industry.

Last Thursday, the CBIRC promised to improve how it works with other regulators to “guarantee the delivery of homes.”

The boycott of mortgages by home buyers across the country has already hurt more than 200 projects and at least 80 property developers, according to a report released on Monday by the E-house China Research and Development Institution.

E-house said that mortgages on stalled real estate projects in China were worth 900 billion yuan in the first half, which is 1.7% of all outstanding mortgage loans.

In an interview on Sunday, CBIRC asked banks to “take on social responsibility” and get involved in the study of plans to fill the funding gap and help real estate projects get bought.

The regulator hoped that these steps would help stabilise the real estate market by making it easy for stalled real estate construction to start up again quickly and for buyers to get their homes sooner.

In Hong Kong, mainland property shares went up sharply.

All three of Country Garden Holdings Co, Longfor Group, and CIFI Holdings (Group) Co rose by more than 6%.

$1 is worth 6.7475 Chinese yuan.