UPDATE 1-Chinese banks' mortgage books in good shape-c.bank

(Adds comments on REITs, affordable housing)

BEIJING, Jan 6 (Reuters) - Delinquency rates on Chinese banks' property loans remain low, especially for residential mortgages, in spite of a downturn in the real estate market, a central bank official said on Tuesday. Banks had extended 2.95 trillion yuan ($432 billion) in home loans by the end of November, up 10.6 percent from a year earlier and accounting for about 10 percent of their local currency lending, Huo Yingli, a deputy director in the financial market department of the People's Bank of China, told a news conference.

"Despite a correction in the property market and changes in house prices last year, the quality of property loans, especially home loans, is still good, with the non-performing loan ratio far below that of other types of loans," she said.

Huo said the PBOC had drafted proposals to set up real estate investment trusts (REITs) -- a plan that has been in the works for years -- and was inviting views from other arms of the administration.

The aim, in light of the lessons of the U.S. subprime mortgage crisis, was to keep China's REITs as simple and as transparent as possible with an emphasis on risk control, she said.

Qi Ji, a vice minister of housing, said the government's plans to ramp up spending on affordable public housing would not distort the private property market since the two segments are quite different.

Each permanent urban resident has just 28 square metres of living space, so the potential demand for housing in China remains huge, Qi told the news conference. (Reporting by Zhou Xin; Writing by Alan Wheatley) ($1=6.835 Yuan)