The Hong Kong Monetary Authority (HKMA) has relaxed the mortgage ratio and the applicable property price ceiling for residential and non-residential properties for the first time in 14 years (2009), including the re-introduction of a 70% mortgage ladder for residential properties under $15 million for self-use, as well as raising the applicable property price ceiling, and the HKMC has also adjusted the mortgage insurance scheme to increase the flexibility of home ownership for people to improve their living environment.
Under the new measures, the same purchase of $10 million owner-occupied residential property, non-mortgage insurance under 70% mortgage only requires a down payment of $3 million, a reduction of $2 million compared to the previous, but it should be noted that the monthly repayment, the minimum income requirement and the amount of the stress test also increased significantly by 40%, if people's income remains unchanged, relaxed mortgage is not possible to buy a $15 million building.
HKMA President Yu Weiwen announced yesterday evening five adjustments to the counter-cyclical macro-prudential measures, including adjustments to the maximum mortgage percentage for owner-occupied residential properties, the property price of $ 15 million or less can undertake 70% mortgage, the property price of $ 15 million to $ 30 million, the maximum mortgage up to 60%, while $ 30 million or more to maintain the same, but the mortgage percentage ceiling for rental properties is unchanged. Before the adjustment, the maximum loan-to-value ratio was 60% for residential properties of $10 million or less and 50% for properties of $10 million or more.
The maximum loan-to-value ratio for non-residential properties (commercial and industrial properties) has been increased from 50% to 60%. Mortgage approval will be based on the level of assets, residential or non-residential will be adjusted from 40% to 50%. Yu Weiwen pointed out that the above adjustments belong to the first relaxation of counter-cyclical measures for residential since the introduction of counter-cyclical measures in 2009, emphasizing that the banking system is still capable of facing challenges.
Yu Weiwen believes that the policy objective is to maintain the stability of the banking system, the relevant adjustments will not be a risk to the stability of banks, that 15 million yuan boundary, not only to protect the risk of the banking system can be controlled, but also to allow home buyers to have more flexible home ownership arrangements, the public can undertake a higher percentage of mortgage loans when buying a home.
He pointed out that the measures are mainly for owner-occupied properties, while non-owner-occupied properties will not be adjusted. Asked whether the measures are bold, he said only to consider the changes in the property market, that the current interest rate environment has changed a lot, and very low interest rate situation has been different, but also refers to the current high interest rate environment has been a period of time.
He also pointed out that the rapid rise in interest rates in the past year, residential property prices began to adjust, although the beginning of this year began to rebound, but as of the end of June, residential property prices have been compared to the high 2021 property prices fell 13%. As for non-residential properties, the situation is also similar, such as office buildings from 2018 to 2019 high cumulative decline of 20%, industrial buildings are down 8%, stores cumulative decline of 17%. Considering the adjustment of the above properties, it is believed that there is room to adjust the counter-cyclical macro-prudential regulatory measures.
Financial Secretary Paul Chan also responded to the relaxation of the property market counter-cyclical measures yesterday in the weblog, said that the fine-tuning of mortgage arrangements, so that the public in the first home or a mortgage commitment, the actual need to pay the down payment burden can be slightly reduced, the part of the mortgage insurance required to purchase also slightly reduced, thus reducing the cost of mortgage insurance premiums that the public must pay. In addition, the HKMC will also offer a "premium concession" for first-time homebuyers to waive the first 5% of their mortgage premiums for properties of $15 million or less.
As for the "property demand management measures" to curb speculation and investment activities, commonly known as "hot measures", Mr. Chan said, "There is no change. We must give priority to meeting the home ownership needs of local citizens. It is worth stating clearly again that there is no prelude or variation to any form of 'spice reduction' in this fine-tuning exercise, and the government has no so-called 'spice reduction' in mind.
While the HKMA is adjusting the mortgage loan-to-value ratio, the HKMC is also increasing the maximum mortgage insurance ratio and the applicable property price ceiling. For example, the property price range for owner-occupied residential properties with 80% mortgage is adjusted from $11.25 million to $12 million to $11.25 million to $15 million (see table for details). Mr. Lee Ling Cheong, President of the HKMC, said that the mortgage insurance scheme has been revised for completed residential properties, and the HKMC will provide premium concessions for first-time home buyers to assist those who need to buy their own homes.
