(Yicai Global) June 2 -- Loans to China’s real estate sector between January and April increased at the slowest pace since 2013 indicating that efforts to curb the housing bubble are taking effect, a senior official at the country’s banking regulator said yesterday.

Property loans gained by 10.5 percent in the four months ended April 30, said Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission.

The proportion of mortgages to overall lending dropped by 0.5 percentage points in those four months compared with the same period last year, he said. It has now fallen for seven straight months, demonstrating that the excessive flow of capital into the housing market is beginning to stall.

The proportion of borrowing has continued to fall across the board, Liang said. The balance of real estate investment trusts slid about 13.6 percent from the same period last year. Wealth management products associated with non-standard property assets slumped by 36 percent. Banks’ investments in the real estate sector through special purpose vehicles also shrank by 26 percent.

Between January and April, first-time home purchases accounted for 91.8 percent of all mortgages, a year-on-year increase of 0.8 percentage point. Loans to the rental housing market jumped by 31 percent.

Last August, the People’s Bank of China and the Ministry of Housing and Urban-Rural Development set new financing rules for real estate firms to mitigate risks as the pace of borrowing by property developers reached record heights.

"Three red lines" were set up to control their scale of debt. These are a 70 percent upper limit of debt-to-asset ratio after excluding advance receipts, a 100 percent upper limit for net debt ratio and a one-to-one down limit ratio for cash against short-term debts.

Regulators have also been keeping a close eye on the unlawful use of personal loans in the housing market. Recently the watchdog slapped five banks with CNY366 million (USD57.4 million) in fines for illegal dealings with real estate developers, Liang said.

Editor: Kim Taylor