The China Banking Regulatory Commission's Shanghai branch has ordered banks to strictly observe the 40 per cent minimum downpayment for buyers of second homes amid intensifying competition in the mortgage market. The order came as banks increase efforts to gain market share, including preferential terms such as cash rebates, effectively allowing buyers of second flats to obtain a mortgage exceeding the official limit, which is 60 per cent of the property's value. Banks were being less stringent to quality customers as they were in a rush to extend loans to fill their quotas, sources said. Clement Luk Shing, a director and assistant general manager at Centaline (China), said banks had become more aggressive in extending home loans in the first quarter on revived buying interest. 'Transaction volume in the second-hand market reached a record 2,000 deals last month,' Mr Luk said. Market insiders said banks would offer property agents cash rebates of 1 per cent to 1.6 per cent of the loan amount for every successful mortgage referral. 'Some property agents will then share the rebates with homebuyers to speed up purchases,' he said. After a sharp rise in transaction volume, he expects month-on-month property sales would decline 10 per cent to 15 per cent this month. 'It will take time for buyers to accept property prices have increased 3 to 5 per cent,' he said.