Lending to developers slows in Q2

China saw its volume of outstanding property loans conwtinue to increase in the second quarter of the year, with growth in loans to property developers slowing, while growth in mortgage loans sped up, according to a report released by the People's Bank of China (PBOC) late Friday.

By the end of June, outstanding property loans by major financial institutions, including both mortgages and loans to developers, totaled 13.56 trillion yuan ($2.21 trillion), up 18.1 percent year-on-year, according to the report. New real estate loans totaled 1.3 trillion yuan, up 130 percent year-on-year.

Outstanding loans to property developers rose 11 percent to 3.26 trillion yuan. This growth was 1.3 percentage points lower than that recorded for the first quarter.

Outstanding mortgage loans in the second quarter rose 21.1 percent year-on-year to 9.07 trillion yuan, giving growth 3.7 percentage points higher than in the first quarter.

"The slowdown in growth of bank lending to property developers was mainly due to banks restricting their loans to such clients," Yang Guoying, an economic commentator, told the Global Times.

Since April 2010, authorities have issued a number of policies aimed at reining in the housing market.

However, bank loans are not the only avenue of funding for property developers, with other channels such as the issuing of bonds open to them, Yu Fenghui, a senior officer from Agricultural Bank of China, told the Global Times. Yu added that the increase in mortgage loans indicates demand among house buyers is still huge.

The data from the central bank also showed new loans for the construction of public housing totalled 85 billion yuan in the first half of this year, accounting for 35.5 percent of all loans to property developers.

By the end of June, outstanding loans issued by financial institutions in China totaled 68.08 trillion yuan, up 5.08 trillion yuan from the end of last year, and up 14.2 percent on an annual basis.