Pension fund could be used to help Hong Kong citizens get mortgage
The government is studying the feasibility of allowing Mandatory Provident Fund (MPF) account holders to withdraw part of their accrued interest for mortgage down payments.
This practice has been adopted in Singapore for a long time, but opinion is divided on whether Hong Kong should follow suit.
People who support the idea claim that it can provide potential home buyers with greater flexibility and relieve their financial burden. But opponents are worried that such a change would add to our overheated property market and expedite the bursting of the asset bubble.
Some even argue that any comparison with Singapore is nonsensical as our percentage of contributions to retirement saving accounts is much lower than that of our counterpart. The new measures would also undermine the pillar function of the MPF scheme for retirement protection.
Although critics’ remarks should not be ignored, I personally support the idea. Firstly, there are already plenty of financing methods for home buyers, cheap money from banks and sub-prime mortgages from aggressive developers or financing companies.
They should be blamed for our irrational property market, rather than this new initiative. Using MPF account savings for down payments won’t increase the leverage ratio (that is, debt levels in Hong Kong).
Secondly, the government may strike a balance by stipulating that only account balances in excess of a certain amount and account holders below a certain age limit, say 40-45, can opt for this new measure.
Finally, our MPF scheme has long been criticised for its inefficiency and low returns, and this new idea could exert some pressure on scheme operators to seek improvement.
I urge the government to launch a public consultation on this issue as soon as possible.
Stanley Ip, Tseung Kwan O