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China's Henan reverses easier-mortgage plan

HONG KONG (MarketWatch) -- China's Henan province on Wednesday rescinded a plan to allow local banks to offer discount mortgages to first-time home buyers, just days after the policy was announced, reflecting a pushback from Beijing on provinces pursuing their own easing policies.

Henan canceled measures that would have enabled banks to offer mortgage loans at discounts of as much as 30% from benchmark lending rates, according to a report Wednesday in the 21st Century Business Herald, which cited a source from Henan's state banking regulator.

Provincial authorities had ordered the banks to offer discount mortgages to first-home buyers, announcing the move on the Henan government website Monday. The move was seen as an effort to prop up the housing market as the economy cools.

The statement also included directives to make it easier for individuals who already have purchased and sold homes to qualify for mortgages.

But the original announcement may have been intended to test the response from the central government, according to Dow Jones News Newswires.

The newswire noted that the website announcement was structured in an unusual way, providing the province with room to abandon the policy if it met with resistance from the central government.

Some areas of China have moved ahead with selective policy easing to the property sector this year. Reports in April indicated that new-home buyers in Beijing were able to secure mortgages at a 10% discount to benchmark rates.