Shenzhen led the housing recovery on the mainland in the first half with record-high prices, giving state banks cause for concern over possible credit risk, and the frenzy is expected to cool over the next few months, analysts said. New home prices in Shenzhen jumped 15.9 per cent last month from a year earlier, much higher than the next-fastest pace of 0.2 per cent in Shanghai. The remaining 68 cities tracked by the National Bureau of Statistics were still seeing price declines. The city bordering Hong Kong also outperformed in month-on-month terms, with a gain of 7.2 per cent in June, far ahead of the runner-ups of Beijing and Guangzhou, each with an increase of 1.6 per cent, according to the statistics agency. "Rising transactions and soaring prices have not only used up a large amount of [banks' annual lending] quota, but also accumulated some credit risk," said property consultancy Midland Realty in a report. The big state banks "will probably postpone approvals [for mortgage loans] and increase scrutiny to make sure that loans go to end-user homebuyers with stable debt-servicing capability", it added. Major lenders in Shenzhen have started to tighten mortgage loans since mid-June. Data from Rong360.com a financial product search engine on the mainland, showed 13 of the 25 banks it tracks in the city increased mortgage rates this month for first-time homebuyers, including Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of Communications - four of the country's five largest lenders. The remaining Big Five lender, China Construction Bank Corp, lowered the rates together with smaller rivals China Guangfa Bank and Bank of East Asia. The changes pushed up the city's average mortgage charges to only 1 per cent below the central bank's benchmark rate, which is the smallest discount so far this year. The average discount on mortgage rates to first-time buyers was 5.9 per cent in Guangzhou and 9.2 per cent in Shanghai and Beijing, Rong360 said. The tightening moves by banks, along with the mainland's stock market volatility, have cooled buying sentiment. Property consultancy Centaline China said its leading indices tracking asking prices and the general outlook of its branch managers in Shenzhen had been negative over the past five weeks, although the city's transactions of existing homes have remained high. Nationwide, transactions of existing homes in 21 cities tracked by Centaline rose 3 per cent last week from the week before in terms of floor space. However, new home sales fell 3 per cent during the period for a fourth week. "Although there is so far no major setback in the overall market, the pace of transactions is slowing," Centaline said. "As the hot weather pushes the market into its traditional slack season, we expect the [buying] frenzy will cool a bit in August."