If Wolves were to offer to loan the Portuguese youngster they would be expected to pay his full £2m wages. Bayern, however, would be leaning towards the permanent sale of Sanches for a reported fee of £20m.
After falling out of favour at the Allianz Arena, Sanches opted to make the switch from Munich to Swansea in an attempt to gain some more regular playing time under the Swan's previous manager Paul Clement.
However, the 20-year-old struggled to adapt to life in the Premier League and he soon found himself falling down the pecking order at the Liberty Stadium. Despite being crowned Europe's 'Golden Boy' in 2016, things have only gone rapidly downhill.
These rumours come after a turbulent week for Sanches, who was criticised heavily by Swansea's soon to be leaving manager Carlos Carvahal after a Twitter controversy involving the midfielder caused significant backlash amongst Swansea supporters.
Speaking to the BBC, Carvahal said "They put things in their hands that are not football and they think they are doing a good thing. But they are doing one of the more stupid things in the world.
"He knows he has had a very bad season.
"In the time I have been here, I can say he is not at the level he was before at Benfica; but he is building and we thought we could push him to that level he played at before. But when he got the injury that finished again."
Sanches has appeared in 16 total matches across all competitions for Bayern and Swansea this season, garnishing just one assist and no goals.