73,000 families used HKMC loans in 11 years
More than 73,000 families have used the Hong Kong Mortgage Corporation's scheme to buy flats since 1999, but critics say the figure is small compared with total transactions in the same period.
The corporation says a steady increase in the use rate from 3 per cent in 1999 to 18 per cent last year shows the mortgage insurance scheme is doing its job.
But Democratic Party legislator Lee Wing-tat said the number of transactions using the scheme was only about 8 per cent of almost 870,000 total transactions over the past 11 years. 'This shows the scheme is not very successful,' he said.
The scheme aims to help people with insufficient savings to become homeowners. It offers mortgage loans of up to 95 per cent of the property's value by insuring the amount of the loan above the standard 70 per cent that a bank will offer. People who take up the offer must pay a premium which varies from borrower to borrower. The premium, which is calculated on factors such as the amount borrowed, the loan-to-value ratio of the property and the length of the repayment period, varies from less than 1 per cent to about 4 per cent of the amount borrowed.
Its annual report published on Friday showed the scheme had helped more than 73,000 families to buy homes, with drawdowns totalling more than HK$151 billion.
'The average loan size under the programme is HK$2.1 million, indicating that it mainly helps first-time buyers to acquire homes,' Financial Secretary John Tsang Chun-wah, the government-run corporation's chairman, said in the report.
However, only 15,282 applicants - or 41 per cent of the 37,142 applications approved last year - took up the offer, although some filed several applications through different banks.
Corporation chief executive James Lau said the scheme's users were mainly first-time buyers and between 80 per cent and 90 per cent the loans were for second-hand properties showing it achieved the policy aim of promoting wider home ownership.
Lee said the government should review the scheme. 'Even when the HKMC approves an ... application, some people don't take up the offer. It's now time ... to consider if the premium can be cheaper without causing the government too much risk,' he said.
But he said the most effective way to help people buy homes was to increase land and flat supply and resume the Home Ownership Scheme.
Professor Eddie Hui Chi-man from Polytechnic University's building and real estate department said the scheme suited people who had high salaries but not enough money for the down payment.
'However, many potential homeowners are on low incomes and have insufficient savings, therefore, they may rather choose to borrow money from their families to make up the down payment of at least 30 per cent of the flat price.'
Professor Chau Kwong-wing, the chair professor of the University of Hong Kong's real estate and construction department, agreed.
Both scholars said cutting the premium would make the scheme more attractive. But it might raise the financial and moral risk the government faced, and fuel the property market as getting home loans would be less expensive.
Sharmaine Lau Yuen-yuen, chief economic analyst at Referral Mortgage Brokerage Services, said unlike other lending institutions, having more clients was not good for the corporation which needed to balance the risks of the banks too. 'It is not about the scheme being unable to assist flat owners - indeed, about 70 per cent of our clients do not need to get mortgage loans of more than 70 per cent of the flat price,' she said.
A consultation document will be unveiled as early as this week to gauge public views on using taxpayers' money to help people buy homes. The consultation will last until October.