HONG KONG: HSBC and Standard Chartered refuse to grant new loans to buyers of real estate in two unfinished residential projects in Hong Kong developed by the Chinese group Evergrande, three mortgage brokers announced Wednesday.

One of the brokers told Reuters that Bank of East Asia had taken a similar step.

The banks’ move came after a Chinese court froze a $ 20 million bank deposit held by Evergrande this week and a Chinese city regulator briefly suspended sales of two of its projects.

The three brokers said the banks had stopped lending to two residential projects in Hong Kong that were due for completion in August and October, but they said the banks were still lending for a third, the Evergrande development completed.

Other banks could follow suit, they added.

HSBC declined to comment while Standard Chartered did not respond to the request for comment. The Bank of East Asia said on Wednesday evening that approved applications would not be affected and that it would continue to accept loan applications when funds are released to buyers after apartments are completed.

Evergrande said other banks are still approving mortgages for its off-plan units. He said he expected any decision by Hong Kong banks, which he did not name, to stop lending to have only a minor impact. He said his developments were on schedule.

Ivy Wong, Managing Director of Centaline Mortgage Broker, said that, from a bank’s perspective, “a mortgage for pre-sold developments is a loan without the collateral for a completed property, so the risk is higher. “.

Mortgage brokers said only a small number of buyers had been affected as many applications for the two unfinished projects had already been approved.

They said potential buyers may also look to change payment terms with Evergrande to make a purchase after completion.

Eric Tso, senior vice president of Mreferral, said many buyers whose applications had been rejected initially sought to borrow directly from Evergrande, which in the past offered mortgages of up to 90% of the purchase value.

“But now Evergrande doesn’t extend mortgages anymore,” Tso said, adding that banks typically wouldn’t offer mortgages with a 90% loan-to-property ratio.

Evergrande did not say whether it still offers mortgages.