New circular on real estate credit

China's banking regulator has just released a new circular, requiring banks to strengthen their management on commercial real estate credit. This comes with a rise in the number of house buyers who can't afford their mortgages.

The China Banking Regulatory Commission sent an inspection team to Shanghai a month ago. The team discovered some real estate companies had forged documents to help non-credit worthy customers get mortgage loans. The CBRC is calling on all banks to step up risk control, and carefully revalue the credit of both the real estate developers and home buyers to avoid further defaults.