(Yicai) Dec. 12 -- Only certain banks have followed local governments' requests in smaller Chinese cities to extend mortgages of buyers of new homes that are delayed amid property developers' liquidity issues.

Only some lenders have adjusted the repayment schedules of borrowers whose new houses are not delivered on schedule, conforming to their situations but those exceptions favor borrowers with larger incomes, per findings of a survey.

Governments of some third and fourth-tier cities such as the county of Chaling in Hunan province, and Dongxiang district in the city of Fuzhou, have recently suggested that financial institutions extend loans for pre-sold houses that will be delivered late.

"Our bank does not accept applications for extending housing loans from individuals," a personal loan manager at a joint-stock bank in Kaifeng, Henan province, told Yicai. Still, the lender can extend mortgages for certain housing projects developed by certain developers. Loans can be pushed back by six to 12 months. After that, the principal and interest must be paid in a lump sum.

Workers of polled commercial banks said that the lenders can adjust the repayment period of mortgages as an extension of policies implemented during the Covid-19 pandemic but the decisions depend more on borrowers' income than the delivery schedule of their new homes.

"Residents in Chinese counties face greater pressures on unstable personal incomes amid the pandemic, and the real estate market in these areas has larger risks," Wang Yeqiang, a researcher at the Chinese Academy of Social Sciences, said to Yicai.

The unusual market behavior will definitely cause profit loss to commercial banks, Wang said, adding that lenders will balance between relaxed policy and risks while further assessing individual borrowers' employment and income situations and making new rules to prevent defaults.

Commercial banks in counties are less willing and motivated to extend personal housing loans than state-owned banks mainly because of their smaller funds so they should stay more alert to capital chain risks arising from borrowers who are not repaying their loans on time, said Guan Rongxue, a senior analyst at Zhuge Data Research Center.

Editor: Emmi Laine