SHANGHAI, July 10 -- SHANGHAI'S rising housing market created a major jump in home loans issued by domestic banks last month, accounting for two thirds of the total surge of new mortgages in the first half of the year.

Home loans rose 429 percent, or 4.55 billion yuan (US$600 million), in June from a month ago, according to the central bank's Shanghai headquarters.

The surge was mainly based on increasing housing sales, the head of mortgages at Industrial and Commercial Bank of China's Shanghai branch told Shanghai Securities News.

Without government policies to restrain the housing market, property deals will continue at a stable pace in July and August, ensuring a strong second half for mortgages, said the ICBC official.

It was reported that 4.37 billion yuan of last month's loan total was invested in new homes, which was different from January to May. In the first quarter, about 60 percent of the 940 million yuan in home loans was spent on second-hand houses. Mortgage loans used on second-hand houses in May reached 64 percent of the total, the newspaper said.

However, commercial banks reported a drop in loan growth during the first half of the year. The increased loans last month were 18.22 billion yuan less than a year ago, the newspaper said.

The surge may be partly due to profits earned on stock markets, said the Shanghai headquarters.