By Zhang Fengming

    The expected pay-in-advance rush on mortgages didn't occur in Shanghai, despite five interest rate increases this year, banks in Shanghai said.

    The year-end is usually a peak season for mortgage owners to pay back their home lending in advance - just ahead of the point where new rates take effect in the new year.

    The People's Bank of China, the country's central bank, raised its interest rates five times this year. Rates haven't increased so many times within a 12-month period since 1991.

    Interest rates for mortgages lasting more than five years were boosted to 7.83 percent from 6.84 percent, a 14.47 percent increase.

    Even for preferential lending rates, the figure stands at 7.83 percent.

    For instance, for a 20-year half-a-million yuan mortgage, borrowers have to pay 245 yuan per month more on the new rates starting from next year.

    It was expected there would be a rush of people keen to clear their mortgages ahead of schedule due to the rapid increase of lending rates. However, banks in Shanghai, including the country's big four state-owned banks, said the number of repayment cases were the same as last year's.

    Xiao Cheng, who applied for half million yuan home loan in 2002 for his 800,000 yuan apartment in Changning District, was not rushing to clear his debt.

    Xiao, who works for a financial institution in Shanghai, decided not to pay in advance for several reasons.

    Investment opportunities

    "The increase of the interest of several hundred yuan is not a huge burden for me," Cheng said. "I'd rather keep the money and reserve the opportunity to make money in the capital market."

    Negative deposit rates and red-hot stock markets attracted money to flow into the sector.