Hong Kong’s monetary authority eases mortgage lending restrictions to jump-start market
HKMA allows buyers to borrow up to 70% of a property’s value, with the aim of reviving the market where prices have declined by 6.2% in the year’s first eight months
Hong Kong has taken steps to revive the city’s property market by easing mortgage financing rules to pre-2009 levels, after a policy tweak in February produced only a short-lived burst.
Homebuyers will be able to obtain as much as 70 per cent financing effective immediately, regardless of the value or use of property, the Hong Kong Monetary Authority (HKMA) said in a statement. The debt-servicing ratio has been raised to 50 per cent from 40 per cent, standardising the level for both residential and non-residential properties, it added.
Homes valued at more than HK$30 million (US$3.8 million) will be entitled to 70 per cent mortgage financing, compared with 50 per cent to 60 per cent previously, HKMA said. Chief Executive John Lee Ka-chiu earlier announced the initiative in his policy address.
HKMA CEO Eddie Yue Wai-man said the changes were made based on the current condition of the property market. The revision also meant that mortgage policies have been rolled back to what they were before 2009, when borrowing costs hit all-time lows after the global financial crisis.
“Even with these adjustments announced today, the Hong Kong banking sector has ample buffers to cope with any challenges from a sharp correction in property prices,” Yue said in the statement.
