(Yicai Global) Nov. 13 -- Banks' have tightened their credit lines on stronger demand for financing of the real economy, tougher financial regulations and strained liquidity.

Banks set their business loan limits for the last two months of this year significantly lower than they have in the past. Securing a personal loan may also be difficult as many banks have used their quotas through January, China Securities Journal quoted an investment banker from one of the country's 'big four' banks as saying.

The home loan limits at Industrial and Commercial Bank of China Ltd. [SHA:601398] (ICBC), China Construction Bank Corp. [SHA:601939; HK:0939] (CCB), and China Merchants Bank Co. [HK:3968; SHA:600036] (CMB) have been stretched, and customers will likely need to wait until January to get a mortgage.

"The applications can be approved but it is really hard to fix the specific time for making the loans," a manager at one institution said. "Currently the benchmark of our mortgage rate is up by 10 percent, and some clients will offer an increase of 5 percentage points on this in order to gain the loans more quickly while those failing to do so have to keep waiting."

As their credit limits are squeezed, banks have upped the interest rate on business loans. "The interest rate has been raised a lot," the head of an investment banking team at a big four bank said. "For quality state-owned enterprises (SOEs), a loan can be issued with an increase of 6 percent on the benchmark interest rate, and this number will be as high as 30 percent for other common enterprises."

Supervision departments will control the speed at which banks issue loans, said Xu Jing, an analyst at Moody's Investors Service. Several banks feel credit line restrictions near the end of the year, Xu said.

"In addition, the on-balance sheet loans have gained a rapid growth in the first three quarters this year, indicating that the bank loans have made the main contributions to the higher increment of social financing this year which is mainly driven by the medium and long-term corporate loans and resident loans, reflecting the strong demand for real economy financing and resident credit," said Xu. "The tightening condition of credit limits of banks is likely to be intensified at the year-end, due to relevant restrictions on the availability of loans to real estate of banks under the regulation of the real estate sector, and the restrictive role macro prudential assessment plays in the acceleration of general credit."