HKMC cuts premiums 45pc to entice clients
The Hong Kong Mortgage Corp plans to cut premiums as much as 45 per cent for its mortgage insurance programme to entice new customers.
The government-run insurance provider yesterday introduced a new tier of pricing for mortgages with loan-to-value ratios of 70 per cent to 75 per cent. One-time, or single, premiums equal between 0.55 per cent and 0.85 per cent of the loan value. This compares with current premiums of 1 per cent to 1.85 per cent that apply to loan-to-value ratios of up to 80 per cent.
'The 75 per cent loan-to-value product is expected to attract borrowers who wish to borrow marginally higher than 70 per cent loan-to-value,' the HKMC said. The mortgage insurance programme allows homebuyers to take out loans of up to 95 per cent of a property's value.
'Some people may want to try the programme if they just borrow marginally higher than 70 per cent, as they could save premiums of as much as HK$10,000 for a HK$2 million loan with a maturity of 20 years,' Bank of East Asia senior mortgage distribution manager Kenneth Tsin Wai-lun said.
He said most homebuyers under the programme tended to borrow 80 per cent or more of the property value.
The HKMC also said the maximum premium discount for a mortgage with a loan-to-value ratio of up to 85 per cent would be increased from 20 per cent to 25 per cent of the gross premium.
This arrangement will also be extended to 90 per cent loan-to-value products with a maximum discount of 15 per cent.
The HKMC cut its premiums on mortgages with a loan-to-value ratio of up to 85 per cent last year.
It said it had enhanced its in-house credit scoring model, which allowed it to extend the scope of the scheme.
However, mReferral Mortgage Brokerage Services principal vice-president Donald Cheng Wai-hung said getting the maximum 45 per cent premium discount depended on a customer's credit profile and whether the customer qualified for a loyalty discount.
The price reduction starts next Wednesday.
Meanwhile, mReferral has partnered banks to launch a mortgage programme with rates as low as 4.4 per cent for the first year and 4.67 per cent thereafter.
