China plans to offer RMB 200bn ($29.3bn) in special loans to the troubled property sector, as per sources. These loans are meant to ensure that stalled housing projects are delivered to buyers. While the loan program was on the cards, the size and extent of it was unknown. This is now the biggest financial commitment yet from Beijing to the entire property sector where many homebuyers have been stuck after making down payments and taking out loans on properties that cash-strapped developers are struggling to complete. As a result of non-completion of projects, homebuyers in 22 cities began boycotting mortgage payments, with Chinese banks also getting pulled into the sector’s difficulties. The sources said that these special loans will only be used on homes that have already been sold but are yet to be finished.

This news comes in addition to support programs by Beijing that included setting up a real estate fund of up to RMB 300bn ($44bn) to bankroll the purchases of incomplete home projects, start completing construction, and then rent them to individuals to boost rental housing. The fund could be utilized to buy financial products issued by the developers or finance state buyers’ acquisitions of projects. The support also comes on the back of news early last week where sources said that Chinese authorities informed developers like Country Garden, CIFI, Longfor, Seazen and Gemdale that state-owned credit support provider China Bond Insurance Co. will provide unconditional and irrevocable guarantees for some of their upcoming onshore bond offerings.

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