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There are two stages to the sector's rescue strategy. The People's Bank of China would first lend money to domestic commercial banks at a reduced rate of 1.75 percent annually. These loans will reach roughly $30 billion in total.
The developers will then be able to finish work on problematic sites since banks will be able to use both these loans and their own cash to make fresh loans to developers.
This decision of the government was induced by the possibility of a mortgage crisis in China. Due to the delay in the completion of their homes and the developers' announcements of default or bankruptcy, homeowners are unwilling to make mortgage payments.
The FT reports that 8 million apartment construction projects have been put on hold across China during the past year. More than 300 residential complexes are owned by apartment buyers who have stated their refusal to continue making mortgage payments.
Asia's richest woman, Yang Huiyan, co-chairwoman of Country Garden Holdings, has lost roughly half of her fortune since the start of the year, which, according to Bloomberg, is now valued at $11.3 billion, serves as an illustration of the crisis' scope.
source: ft.com
The developers will then be able to finish work on problematic sites since banks will be able to use both these loans and their own cash to make fresh loans to developers.
This decision of the government was induced by the possibility of a mortgage crisis in China. Due to the delay in the completion of their homes and the developers' announcements of default or bankruptcy, homeowners are unwilling to make mortgage payments.
The FT reports that 8 million apartment construction projects have been put on hold across China during the past year. More than 300 residential complexes are owned by apartment buyers who have stated their refusal to continue making mortgage payments.
Asia's richest woman, Yang Huiyan, co-chairwoman of Country Garden Holdings, has lost roughly half of her fortune since the start of the year, which, according to Bloomberg, is now valued at $11.3 billion, serves as an illustration of the crisis' scope.
source: ft.com
