China’s central bank will extend a year-end deadline for lenders to cap their ratio of property sector loans, one of the strongest moves yet by Beijing to relieve pressure from the credit crunch roiling China’s real estate sector.The People’s Bank of China’s extension of the “collective management system for real estate loans” has the potential to affect 26 per cent of China’s total banking loans, giving lenders and cash-strapped real estate developers breathing space as they fight to survive a historic property sector downturn.

According to a document signed off by the PBoC and the China Banking and Insurance Regulatory Commission, and viewed by the Financial Times, lenders now have an as yet unspecified amount of time to cap the ratio of their outstanding property loans to total loans at big banks at 40 per cent, and their outstanding mortgages as of total loans at 32.5 per cent.

The extension beyond December 31 is the most important in a batch of relief measures approved by central bankers and the CBIRC on November 11, according to the document.