Chinese regulators are pushing banks to speed up approvals of new loans to cash-starved private property developers in a bid to revive homebuyer sentiment that risks denting lenders’ asset quality, sources said.

The effort uses the “whitelist” mechanism, Beijing’s latest support measure aimed at easing the sector’s unprecedented liquidity squeeze and spurring home purchases, as new home prices fell last month for an eighth straight month.

Now the banking regulator wants faster loan approvals for residential projects under the “whitelist,” with effect from last week, the sources said.

Banks have been reluctant to grant new loans to property projects, while mostly extending maturity and lowering interest rates of existing loans.

The “whitelist” program covers projects of state-backed and private developers that need fresh financing of 1.5 trillion yuan (HK$1.62 trrillion), said sources.

Meanwhile, Longfor (0960) was reported to use new bank loans to repay debts to two insurers as it has confidence in obtaining loans totalling 10 billion yuan each year, Bloomberg reported.

And China South City (1668) warns the net loss for the nine months ended December is expected to range from HK$4 billion to HK$5 billion.

Reuters and staff reporter