Banks grant cash-strapped homeowners longer terms

PUBLISHED : Wednesday, 08 July, 1998, 12:00am
UPDATED : Wednesday, 08 July, 1998, 12:00am

Banks are keen to increase the length of mortgages of financially embattled homeowners so they can continue to meet monthly payments, property agents say.

Agents had heard of homeowners having 15-year mortgages extended to 20 years.

A Hang Seng Bank spokesman said it had received some such requests from homeowners, most of whom had failed recently to make payments.

'If they have missed one or two months we contact them to find out the problem,' she said.

The bank would consider extending the length of the mortgage and base its decision on the age of the property, existing terms and customer details, such as financial situation, before agreeing.

Hang Seng Bank would not say how many mortgages it had rescheduled.

However, the numbers of applications for such consideration from cash-strapped homeowners were on the increase, the bank said.

Hongkong Bank would not reveal whether it had adopted such a practice.

'Obviously we would be talking to our customers,' said Gareth Hewett, a Hongkong Bank spokesman.

Banking analysts and property agents said increasing numbers of homeowners were approaching banks seeking financial relief in these tough economic times.

Property agents said the number of bank foreclosures was down recently because banks were more willing to allow homeowners to reschedule payments.

Centaline Property Agency assistant district manager in Kingswood Villas Eric Tso Tak-ming said some investors had been able to renegotiate mortgage from 15 up to 20 years.

However, he said anybody with an existing 20-year mortgage stood little chance of gaining an extension to 25 or 30 years.

Centaline Property Agency managing director Shih Wing-ching said considerable savings could be made by homeowners if they were allowed to reschedule mortgage from 10 to 15 years.

He said the difference could amount to a few thousand dollars a month.

Analysts said job loss and the 40 to 45 per cent fall in property values would be the main reasons why banks were willing to extend the terms of a homeowner's mortgage.