China Construction Bank sets a hike on mortgage rates for first home buyers. [CFP]

China Construction Bank's Beijing branch spearheaded a hike on mortgage rates by 5 percent for first home buyers, raising concerns that the housing market is reaching a critical crossroad.

Banks in cities across the country, including Guangzhou, Shenzhen, Shanghai, Wuhan, Changchun and Wuxi, have followed suit.

Some analysts worried that the increase will greatly impact the buyers who are going to purchase homes for living purposes instead of as investments, and will compound the already weak property market. Other analysts thought that the banks have reasons to raise rates to offset the risks stemming from the declining home prices.

China's business press carried the story above on Tuesday.