New | Mortgage draw downs slow to a trickle as China tightens credits
The central bank is requiring banks in some cities to monitor their loan amounts every 10 days, instead of the monthly review, to keep a lid on lending
Chinese commercial banks are slowing the ability of their borrowers to draw down on their loans, amid a directive by the People’s Bank of China to tighten the disbursement of credit to keep property prices in check and prevent capital flight.
By tightening the credit pipeline, China’s central bank expects to bring some stability in a sector that has seen rampant price growth in the past few months and even raised bubble fears. But the move has also put lenders in a spot as borrowers are not too happy with the move.
The longer than expected waiting time could lead to disputes, especially from home sellers who are in urgent need of the money, such as paying it for bigger home purchases, said industry sources adding that there have also been instances of actual protests at some bank outlets.
A Bank of Communications branch in Shanghai has delayed the drawdown of a 1.5 million yuan mortgage loan, approved at the end of 2016, by three months until March, said a borrower who declined to be named. The bank’s branch declined to comment when contacted on the issue.
Other banks in Shanghai like China Merchants Bank and China Guangfa Bank have also imposed waiting time of between three to four months after the PBOC directive, said unnamed bank customers.
According to borrower at the Industrial and Commercial Bank of China, China’s biggest lender was still better placed than its smaller rivals in extending loans quickly. But the recent directives could mean some temporary hardships for borrowers, the source said.
China Merchants Bank and ICBC officials declined to comment on the development, while Guangfa was not immediately available for comments.