* C.bank tells banks to relax mortgage lending-sources
* Tight mortgages contribute to weak housing market
* No formal policy from PBOC, just "window guidance"
* Banks may ignore c.bank's plea (Adds data, banker doubts on impact)
By Heng Xie and Hongmei Zhao
BEIJING/HONG KONG, May 13 (Reuters) - China's central bank has asked commercial banks to speed up the granting of home loans and to set mortgage rates at reasonable levels, four sources told Reuters on Tuesday, underlining its efforts to support the flagging property market as the economy cools.
But bankers also expressed doubt that such so-called "window guidance" from the central bank would have a significant impact on bank lending practices.
The People's Bank of China (PBOC) made the request for greater mortgage lending at a meeting with commercial banks on Monday, the sources said.
Tight mortgages are considered one of the reasons for the cooling of property market this year, as banks have raised home loan rates for first-time buyers or delayed the granting of mortgages because of tighter liquidity.
The central bank was not available for comment.
"Loans to real estate developers are still restricted, and regulators won't easily loosen their grip," said a banker with direct knowledge of the central bank's guidance.
"But for mortgages - especially mortgages for first-time buyers - policy is supportive. The central bank has consistently mentioned this in reports. Re-emphasizing it now is common sense."
Shanghai-listed property shares closed 0.9 percent higher on Friday compared to a 0.1 percent fall in the broader Shanghai Composite Index. But some bankers said the central bank's exhortations may have little impact.
"It was just oral guidance. There wasn't any formal document. We won't adjust our current policy towards real estate and mortgages. I believe all the other banks also won't reduce the price on mortgage loans," said an executive at a mid-sized bank.
Such guidance runs counter to the broader trend toward liberalising interest rates and letting market forces determine resource allocation, he said.
"Regulators can't crack the whip on interest-rate liberalisation on the one hand, then on the other hand use all sorts of administrative measures to interfere with commercial banks' own business strategies. Banks are market-ized now. Profit presssure is heavy," said the mid-sized bank executive.
China's home prices rose at double-digit rates in most cities last year, but the market has shown signs of cooling since late 2013 as authorities clamped down on property speculation and banks made it harder for home buyers and small developers to get loans.
Data released on Tuesday showed that property investment slowed in April, while housing sales fell on a year-on-year basis.
Home mortgage interest rates ticked hit 6.70 percent in the first quarter this year, up 17 basis points from the fourth quarter of 2013, the PBOC's latest monetary policy report showed.
Nearly 90 percent of bank mortgages were set at rates 5 to 10 percent above the PBOC's benchmark personal mortgage rate, according to a survey of 69 bank branches in 22 cities earlier this year. Some banks were offering mortgages at premiums of up to 20 percent.
The PBOC's benchmark for home mortgage loans with a maturity above five years is currently set at 4.50 percent, but banks are allowed to offer mortgages at variable rates up to 30 percent lower.
Some banks were also pressuring mortgage loan applicants to deposit funds with the bank or to buy wealth management products, otherwise they would face lengthy processing delays or elevated interest rates, according to Rong360.com, a data provider on retail finance.
Chinese banks are facing restrictions on loan growth from slowing deposit growth and tighter capital adequacy requirements.
Forcing customers to make deposits helps banks expand lending without exceeding the maximum 75 percent loan-to-deposit ration. Wealth management products enable banks to preserve capital by shifting some loans off-balance-sheet.
(Writing by Gabriel Wildau; Editing by Kim Coghill)