(Yicai) Jan. 14 -- Chinese regulators have issued new guidance allowing real estate projects included in the government-backed financing “white list” to apply for longer loan rollovers than previously allowed in a move aimed at easing near-term debt repayment pressure on builders, banking industry sources told Yicai.

Market rumors said the permitted extension could be increased from the prior limit -- half of the original loan term -- to the same as the original loan term. Practically, that would allow a five-year corporate loan to be extended up to 10 years, significantly lengthening the repayment horizon. An investment head at a leading developer confirmed the rumors to Yicai and said detailed implementation rules are expected to be gradually clarified and released.

A senior real estate analyst said more than 40 percent of developers’ total outstanding loans are medium- and long-term borrowings coming due between 2024 and this year. Under the earlier extension rules, most of these loans could be rolled over only until the end of 2026. With the sector still in a prolonged downturn, longer extension periods would help smooth repayment pressure and push major debt maturities back to after 2028.

Regulators aim to “buy time to create space,” giving well-collateralized, white-listed projects a buffer to complete construction and avoid becoming unfinished buildings, thereby supporting project delivery and market confidence, according to Yan Yuejin, vice president of E-House Real Estate Research Institute.

The change seeks to balance the rights of banks and developers, said Li Yujia, chief researcher at the Housing Policy Research Center of Guangdong Urban Planning and Design Institute. If banks were to force repayment, developers might be compelled to sell projects at steep discounts, depressing local prices and ultimately weakening recovery prospects for lenders. Reasonable loan extensions, by contrast, can give projects critical breathing room, Li said.

However, a banking industry analyst cautioned that “the ultimate effect of the policy will still depend on the actual sales proceeds of real estate projects. If the market remains sluggish, the new policy may only postpone risks within the banking system.”

The white list system, through which local governments and financial institutions jointly vet eligible projects under construction, was introduced in early 2024. To qualify, developments must be actively building or capable of resuming work, have adequate collateral coverage, and be subject to closed-loop supervision of funds. Projects admitted to the list gain access to policy support including priority loan approvals, faster disbursement, and eligibility for loan extensions.

The system was designed to ease developers’ cash flow pressure through targeted financing, ensure housing delivery, and prevent and mitigate systemic risks in the property market.

After the first batch of more than CNY520 billion (USD72.8 billion) of white list project loans was approved at the end of March 2024, the balance of newly approved loans had exceeded CNY7 trillion (USD980.4 billion) as of last November, according to publicly available data compiled by Yicai.

Editors: Tang Shihua; Emmi Laine