The China Banking Regulatory Commission (CBRC) has reportedly asked banks to accelerate mortgage lending and to price loans reasonably as the nation’s property market cools.

Tight mortgages are considered one of the reasons for the cooling of property market this year, as banks have raised home loan rates for first-time buyers or delayed the granting of mortgages because of tighter liquidity.

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Nearly 90% of bank mortgages were set at rates 5% to 10% above the People’s Bank of China’s standards.

As economic growth slowed, banks have refrained from offering loans to home buyers and developers amid rising loan defaults. The cost of new homes in the country rose at double-digit rates in most cities last year and the demand for loans weakened.

Home sales fell 18% in April, according to the National Bureau of Statistics. Meanwhile, China’s broadest measure of new credit fell to CNY1.55trn ($248bn) from CNY2.07trn in March, The People’s Bank of China (PBOC) stated.

However, bankers expressed doubts that the central bank’s guidance would have a significant impact on lending practices.

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One of them said anonymously: "It was just oral guidance. There wasn’t any formal document. We won’t adjust our current policy towards real estate and mortgages. I believe all the other banks also won’t reduce the price on mortgage loans."

The PBOC’s benchmark for home mortgages loans with a maturity above five years is currently set a 4.50%, but banks are allowed to offer mortgages at variable rates up to 30% lower.

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