Financial regulators have urged commercial banks in Shenzhen, Guangdong province, to monitor mortgage-backed business loans that are suspected of fueling speculative investment in the property market and boosting home prices, people familiar with the matter said.

The "self-inspection" of commercial banks continued until midnight on Monday, and the statistical data are still being tracked, said a source with the financial regulator, who did not want to be identified. The official, however, confirmed that commercial banks had received the emergency notice from the central bank's Shenzhen branch on Monday.

The notice, shared by some Shenzhen lenders, indicated that they were required to check and report all the outstanding loans that used self-owned real estate as mortgage to obtain bank lending for commercial purposes till the end of March. The latest data need to be compared with the records in March and December of last year to check for abnormal boosts.

The Shenzhen branch of the People's Bank of China, the central bank, and the local office of China Banking and Insurance Regulatory Commission have jointly taken measures, urging commercial banks to check whether the borrowers (including companies and individuals) have purchased new houses since the novel coronavirus outbreak (especially since Jan 25) and pledged the new houses to leverage more funds for property speculation, a source from a local bank said.

They are also checking applications for the government's interest subsidies and the real lending rates, suspecting that some have taken advantage of the preferential policies for supporting small and medium-sized companies affected by the COVID-19 outbreak, he said.

Local news reports suggested that speculative investors could pledge their own houses for commercial loans by registering a new company or buying a company costing 3,000 yuan ($423.41) to 5,000 yuan.

Interest rates of commercial loans for small and medium-sized companies have declined as the central bank injected funds through the re-lending scheme to encourage credit for small businesses. In addition, the fiscal subsidies for the virus fight can repay about half of the interest.

The central bank has approved 1 trillion yuan for relending and rediscount provisions, adding to the earlier batch of 500 billion yuan quota to boost credit for small and medium-sized companies.

The speculative activities might have boosted house prices in Shenzhen recently, analysts said. According to the National Bureau of Statistics, prices of new houses in Shenzhen rose by 0.5 percent in March compared with a month earlier, while pre-owned house prices increased by 1.6 percent, higher than other first-tier cities.

The country's top policymakers held a meeting on Friday and reiterated that "houses are for living in not for speculation", which indicated that property restrictions have not been eased despite the real estate market slump amid the COVID-19 outbreak.

Zou Lan, head of the financial market department at the PBOC, said recently that the central bank will work on stabilizing land and house prices as well as market expectations.

"We laid stress on keeping the policy stable and consistent, as the property industry is capital-insensitive with long cycles," he said. "Companies' investment decisions are based on market and policy changes, relying on the estimation of future market environment."

The central bank has taken measures since 2016 to curb excessive capital flowing into the property sector. In 2019, outstanding property loans increased by 14.8 percent from a year earlier, down by 5.2 percentage points from the level in 2018, said PBOC data.