China will allow local government authorities to buy some homes at "reasonable" prices to provide affordable housing, Vice Premier He Lifeng told an online meeting on housing policy on Friday, the official news agency, Xinhua, said.

China will cut interest rates of mortgage loans and down-payment ratios for homebuyers to boost lacklustre property demand, according to three statements released by its central bank on Friday.

COMMENTS: LARRY HU, CHIEF CHINA ECONOMIST, MACQUARIE "Overall, it's a positive and encouraging direction, that the governments are stepping in to buy housing inventory.

"But in order to evaluate how powerful the impact will be, the key questions are who will be funding the purchase and how much they'll fund in the end. Because funding from local governments would be much more limited than the central government's. Impact of lowering mortgage rates would be limited because there's still a lack of demand and that's why we need govt to be the buyer as a last resort."

BACKGROUND: * China's various policy measures since 2022 have failed to turn around the property sector, which accounted for a fifth of economic activity at its peak and remains a drag on growth. * Over the past few years, a growing list of developers has defaulted on debt repayment obligations and a handful of them, including China Evergrande Group, have been ordered to be liquidated. * Banks have been reluctant to heed Beijing's repeated nudges to bolster credit to the embattled sector given the risks of more bad loans. * China's central and local governments are pushing ahead with policies intended to clear the stock of unsold housing. * Large cities, like Beijing and Shenzhen, have eased home purchase restrictions, and some are allowing homebuyers to swap to a new home from an old one.

(Reporting by Reuters Asia bureau; compiled and edited by Subhranshu Sahu)