CHINA'S commercial banks are entering a high-risk period for increasing housing mortgage loans, according to a report released by the China Construction Bank, the country's second largest commercial lender.　

China's banks could face a rapid rise in mortgage delinquency rates because of the frequent lending rate increases and cheating in housing mortgage loans, the report said.



China has raised the benchmark one-year lending rate five times this year amid efforts to curb investment growth and cool the overheated economy.



Meanwhile, some mortgage recipients cheated on their applications and invested their funds in stock markets, which have more than doubled in value since the beginning of the year.



Analysts believe a drop in the markets could result in more bad loans.



The combined non-performing mortgages of the CCB, the Industrial and Commercial Bank of China and the Bank of China rose to 19.24 billion yuan (US$2.6 billion) by the end of 2006 from 18.44 billion yuan the year before.



The report advised the banking sector to strengthen loan application examination, set up and improve personal credit systems and raise the down-payment ratio for second home buyers.
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