Borrowers, who have had bad loans that were "not from malicious purposes" may also receive the discount after they negotiate with banks, said the report.

Agriculture Bank of China, the nation's fourth largest lender, said yesterday it will deepen discounts for mortgage loans that were issued before August 19 to 15 percent from 10 percent beginning from next year.

Several major banks in the city also issued similar statements yesterday, said the report.

These banks include the Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and the Pudong Development Bank.

The People's Bank of China, the central bank, raised the one-year loan rate from 5.85 percent to 6.12 percent in August.

At the same time, the five-year loan rate grew to 6.84 percent from 6.39 percent. But the central bank also expanded the discount range to 15 percent from 10 percent.

The city's mortgage loans increased by 230 million yuan (US$29.37 million) in local Chinese banks in November, said the People's Bank of China's Shanghai Branch in a report.

The ratio of non performing loans, most of which were granted during the property boom in the past few years, began to rise recently, as domestic lenders increase the number of mortgage loans to generate huge profits.

The city's housing mortgages decreased for 10 straight months from July last year with an accumulated drop of almost 23 billion yuan. Though it stopped declining in May as the housing market slightly rebounded, it dropped again in September by 36 million yuan under another round of austerity measures.

Housing loans in Shanghai rebounded last month thanks to a recovery in the new property market, which finally stopped a two-month decline.

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