In the newly released 2007 Shenzhen Financial Operating Report, by the end of September 2007, 98.5 percent of loans were still in normal status. But the report also says that among mortgage lenders, investment-oriented buying jumped 5 percent compared with 2006, and the proportion of those buying a second or a third home also increased by 14 percent over the previous year, indicating rising risks.

Though mortgage defaults may pick up, experts say it is not likely to trigger a financial crisis as subprimes did in the US, given China's mortgage size and demand for housing. According to the central bank, by the end of March, property-related loans accounted for only 17 percent of all loans in the banking system.

"Some big corrections occurred only in a few cities that experienced crazy property price spurts last year but don't have enough demand to support the market," says Chris Brooke, president and CEO of CB Richard Ellis (Greater China), stressing the market adjustment should be seen on a city-by-city and project-by-project basis rather than an overall collapse.

So far, other cities have not reported mortgage defaults. "Besides, property demand in China is also much stronger than in the US," Brooke says.

But to be on the safe side, most banks have taken measures to improve the mortgage threshold and filter clients more strictly to reduce possible risks.

"Besides the application material that is submitted, such as income statement, we will verify if the apartment that will be bought is the applicant's first or second property, and then check credit records in the central bank's credit collection system," says an official with Bank of China. "But how much mortgage one will finally get also depends on the result of one's property evaluation by three professional evaluating companies rather than the transaction value of the deal."

For instance, if the client bought an apartment for 1 million yuan but the bank's evaluation is 900,000 yuan, the client can only get 630,000 yuan of mortgage rather than 700,000 yuan, she says.

According to an employee of Shenzhen Development Bank, even if the first apartment the client would like to buy is less than 90 sq m, he may still have to pay 30 percent for the first installment instead of the 20 percent as required.

"I do feel banks in Shenzhen have tightened their criteria in giving out mortgage loans and are striving to develop other types of personal loans like car loans," says Song Liang.

Chen Jie's final decision, like most mortgage borrowers now, largely hinges on the property price trend. If prices continue to fall, more will choose to default.

"The sign of a cooling down in China's property market is self-evident. The correction is still going on and may continue until the end of last year," says Li Kongyi, an analyst with Essence Securities.