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Concrete Analysis | Hong Kong property agents face ethical duty advising clients on bank valuation, mortgage financing margin
- Property agents must be very prudent when providing any information to clients on mortgages or bank valuations
- Misrepresentation or failure to keep up with market developments could fall foul of industry’s code of ethics
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Property transactions in Hong Kong’s primary and secondary markets have been declining due to the coronavirus pandemic, and the prospect of a near-term revival is not promising.
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As property prices often fluctuate in an unstable market environment, so too do a bank’s property valuation and in turn the amount of an eligible mortgage loan.
While some buyers of first-hand residential properties would choose to pay the purchase price upon completion of the property development at a future date, they should be aware of the risk if the value of the property drops below the purchase price by that time. If the banks tighten their mortgage approvals, purchasers may have to come up with a larger amount of the balance to complete the transaction.
Since the amount of a mortgage loan being approved may be affected by many factors, property agents must be very prudent when providing any information on mortgages or bank valuations.
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They must not provide any inaccurate or misleading information to potential purchasers. They must also not give any assurance that a certain amount of mortgage loan or terms could be successfully obtained.
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