China’s easing of real estate regulations to help homebuyers and developers is likely to accelerate demand for mortgages, according to S&P Market Intelligence.
The government has eased mortgage costs through interest rate cuts, relaxed some rules on ownership of second homes and urged banks to lend more to buyers.
“The rebound will likely be modest and offer a limited boost to overall lending,” S&P warned, however.
Many homebuyers may pause purchases because of doubts over the financial health of developers, analysts said.
“Policy easing so far has been concentrating on the demand side and little has been done about the over supervision on the supply side,” said S&P Global Ratings credit analyst Esther Liu.
Reviving Loan Demand
The recent measures are aimed at reviving housing loan demand but restricting real estate companies from taking on more debt.
The S&P Market Intelligence report comes amid mixed fortunes for China’s struggling developers.
This week, Seazen Group announced it would issue $100 million of green notes, the first new offshore bond issuance by a Chinese developer this year.
But Fitch Ratings said on Thursday it would withdraw its rating on embattled property company China Evergrande Group and two of its subsidiaries.
A recovery in home sales is critical for restoring cash flow for developers, the S&P unit said.
“The government has so far not eased funding access for developers because that could increase credit risk for the financial system and undo previous efforts to unwind excessive borrowings of the property sector,” it added.
- George Russell, with Reuters
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