The Industrial and Commercial Bank of China 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 yesterday 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 home buyers.

Those with ICBC mortgages will still enjoy a 15-percent discount on mortgage rates.

Industry watchers said ICBC may 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.

(Shanghai Daily February 3, 2009)