ICBC stalls mortgage discount

Special Report:Global Financial Crisis

BEIJING, Feb. 3 -- The Industrial and Commercial Bank

of China (ICBC) has backed away from granting a 30-percent discount on mortgage

rates for existing clients.

The biggest bank in China last month said it would

automatically grant existing qualified mortgage clients a 30-percent discount on

mortgage rates - the preferential policy for new clients - from last Sunday.

However, ICBC on Monday said it was still preparing

the scheme and didn't give a timetable when the policy would be introduced. No

reasons for the change were given.

An ICBC wealth manager in Shanghai said she had to

inform her clients of the change in case they calculated their interest with a

30-percent discount.

The People's Bank of China said late last year that

banks can double the 15-percent discount on individual mortgage rates to 30

percent, to trim the lending burden for homebuyers.

Those with ICBC mortgages will still enjoy a

15-percent discount on mortgage rates.

Industry watchers said ICBC might feel squeezed and

be reluctant to offer the higher discount. However, almost all major banks in

China, such as the Bank of China, the Bank of Communications and China

Construction Bank, have adopted the higher discount.

In most cases, banks said borrowers who enjoyed the

previous 15-percent discount - which meant they had a solid repayment history

with no severe defaults - could apply for the lower rates.

If borrowers think a bank's conditions for being

given the discount are too stringent, they can shift their mortgage to another

bank. Those who move their mortgages may have to pay a commission.

(Source: Shanghai Daily)