BEIJING/HONG KONG (Reuters) - China's central bank has asked commercial banks to speed up the granting of home loans and to set mortgage rates at reasonable levels, four sources told Reuters on Tuesday, underlining its efforts to support the flagging property market as the economy cools.
But bankers also expressed doubt that such so-called "window guidance" from the central bank would have a significant impact on bank lending practices.
The People's Bank of China (PBOC) made the request for greater mortgage lending at a meeting with commercial banks on Monday, the sources said.
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.
The central bank was not available for comment.
"Loans to real estate developers are still restricted, and regulators won't easily loosen their grip," said a banker with direct knowledge of the central bank's guidance.
"But for mortgages - especially mortgages for first-time buyers - policy is supportive. The central bank has consistently mentioned this in reports. Re-emphasizing it now is common sense."
Shanghai-listed property shares closed 0.9 per cent higher on Friday compared to a 0.1 per cent fall in the broader Shanghai Composite Index. But some bankers said the central bank's exhortations may have little impact.
"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," said an executive at a mid-sized bank.
Such guidance runs counter to the broader trend toward liberalising interest rates and letting market forces determine resource allocation, he said.
"Regulators can't crack the whip on interest-rate liberalisation on the one hand, then on the other hand use all sorts of administrative measures to interfere with commercial banks' own business strategies. Banks are market-ised now. Profit presssure is heavy," said the mid-sized bank executive.
China's home prices rose at double-digit rates in most cities last year, but the market has shown signs of cooling since late 2013 as authorities clamped down on property speculation and banks made it harder for home buyers and small developers to get loans.
Data released on Tuesday showed that property investment slowed in April, while housing sales fell on a year-on-year basis.