SHANGHAIBEIJING, July 18 Reuters Chinese regulators stepped up efforts to encourage lenders to extend loans to qualified real estate projects as the beleaguered property sector faced fresh risks from a widening mortgagepayment boycott on unfinished houses.

The China Banking and Insurance Regulatory Commission CBIRC told the official industry newspaper on Sunday that banks should meet developers39; financing needs where reasonable.

The CBIRC expressed confidence that with concerted efforts, all the difficulties and problems will be properly solved, the China Banking and Insurance News reported.

The remarks come as a growing number of homebuyers across China threatened to stop making their mortgage payments for stalled property projects, aggravating a real estate crisis that has already hit the economy.

The latest news helped banking and property stocks recover some of their recent losses. China39;s banking index, which tumbled 7 to a more than twoyear low last week, bounced 1.4 on Monday. Chinese real estate stocks gained 3.1 on the mainland, and jumped 3.7 in Hong Kong.

The rebound in Chinese banking stocks was also aided by news that China will accelerate the issuance of special local government bonds to help supplement the capital of small banks, part of efforts to reduce risks in the sector.

China may also allow homeowners to temporarily halt mortgage payments on stalled property projects without incurring penalties, Bloomberg reported after the market close on…