The People's Bank of China has issued a notice forbidding banks from issuing mortgages to people for properties that are still being planned or built, South China Morning Post said. The measure is aimed at reducing the number of loan defaulters, while cooling a property market that many believe is in danger of overheating.
About 10 per cent of loans last year in the pre-sale sector were non-performing, most of which arose from disputes between buyers and developers, the central bank said. An industry source told the newspaper that the move would slow down the property market's growth, as many small and mediumsized developers rely on pre-sales to fund their projects and the new rules would oblige
them to have more working capital.