No signs of relief from Hong Kong Monetary Authority amid growing calls to lift mortgage restrictions
Stress test requirements should be adjusted, and the loan-to-value ratio for self-use residential properties should be raised, brokers argue
Once a breeze to obtain, a mortgage now is somewhat more tricky to get, thanks largely to the Hong Kong Monetary Authority’s (HKMA) interventions. Now there are growing calls to lift mortgage restrictions to fire-up the once red-hot property sector in Hong Kong.
Sharmaine Lau Yuen-yuen, chief economic analyst at mReferral Mortgage Brokerage Services, says it is time for the regulatory authority to review regulations governing mortgage lending as genuine buyers who are end-users are left out in the cold.
According to Lau, the local property market is now in an “unhealthy state” and “some policy fine-tuning” is needed.
“The first change should be made to the stress test against the debt servicing ability of mortgage applicants,” she says. Debt servicing is defined as the monthly repayment obligations of the borrower as a percentage of monthly income, which is at present set at not more than 60 per cent of a borrower’s income.
“At present, mortgage borrowers must undergo a stress test”, meaning that they must show whether they would be able to continue monthly repayments if interest rates were to shoot up by 3 per cent. “The [percentage] should be lowered to 2 per cent, especially as the pace of interest rate rises in the United States appears to be slower than anticipated.”
According to one property expert, local banks are “eager to extend mortgage loans”.
