HKMA’s tight mortgage policies are misguided and miss the point on home ownership

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HKMA chief executive Norman Chan Tak-lam (centre) speaks as Zhu Min, head of Tsinghua University’s national institute of financial research (left), and Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing, look on, at the Asian Financial Forum in Hong Kong on January 16. Photo: Bloomberg

Published: 10:30am, 17 Feb 2018Updated: 12:36pm, 15 Oct 2020

I refer to the report on the Hong Kong Monetary Authority chief rejecting lawmakers’ calls to relax mortgage policies, citing the overheated market (“Hong Kong Monetary Authority chief Norman Chan rejects calls to relax mortgage policies”, February 5).

The HKMA is terribly misguided in their restrictive mortgage policies. The ultimate goal of cooling down housing prices is to increase affordability and, as a result, home ownership in Hong Kong.

However, the HKMA seemingly doesn’t really care about actual home ownership and is happy to see lower housing prices, even if fewer people have the financial resources to buy property in Hong Kong.

One side effect of the restrictive mortgage policies is that people flock to the primary market, because developers are increasingly offering top-up mortgages to reduce the required down payment. Since for many people this is the only way to afford a decent flat, they become price-takers, and developers can get away with charging whatever they want for newly released units.

On second thought, is this the side effect or actually the intended effect all along? Call me cynical but I really can’t be sure.

I also fail to see the rationale behind requiring a higher percentage of down payment for properties of higher value.

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