Chinese regulators have stepped in to assure homebuyers that they will help local governments complete property projects in time. This comes after widespread threats from homebuyers across China that they would default on their mortgage loans on unfinished apartments. In light of recent developments, investors have growing concerns that stresses from the property sector will spread to the banking sector, resulting in hefty write-downs. Four major state banks including Bank of China, AgBank of China, China Construction Bank and ICBC are most exposed to home loans. However, most of them have come out to say that the risk was controllable. The China Banking and Insurance Regulatory Commission (CBRIC) stated that they will “strengthen coordination with housing and construction authorities and the central bank to back local governments in guaranteeing the delivery of homes…[we] will also guide financial institutions in risk disposal in a market-oriented way while helping to stabilize home prices and expectations as well as property financing.”
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