The Hong Kong Monetary Authority is considering tightening limits on bank housing loans to protect banks from any negative effects of speculation in the luxury property market.
Monetary authority deputy chief executive David Carse said yesterday any steps taken would be aimed at protecting banks and not at dampening speculation.
The authority, he said, was considering a reduction in the 70 per cent limit on mortgages for luxury apartments and a cut in the ceiling of 50 per cent of a salary for monthly mortgage repayments.
'The tightening of lending criteria is not an anti-speculation measure, because that is not our job,' he said.
'Our job is to make sure of the safety of banks. The main objective of tightening up lending criteria is to add a cushion to the bank.' He said the increase in lending last year was due to a sharp rise in bank deposits - up 23 per cent - and trade financing, up 6 per cent.
Mortgage bad-debts had not increased last year, but the flurry of activity in the luxury end of the market was forcing the authority to monitor the situation closely.