The government's tightening of housing policy is starting to take a toll on the mortgage loan market, with the number of mortgage registrations for finished homes at local banks dropping 1.5 per cent in September from August, according to mReferral Mortgage Brokerage Services.
There were 8,092 mortgage registrations for completed flats last month, down from 8,212 in August, it said.
"The 10-point measures announced by the government in August and the tightened policies on mortgage loan lending last month have dented purchasing power," said Sharmaine Lau Yuen-yuen, chief economist at mReferral Mortgage Services.
The figure has stayed below 10,000 since August 2011.
Lau said she expected the mortgage market for finished flats to remain weak in the fourth quarter.
On September 14, the Monetary Authority moved to cool the city's overheating property market by making second mortgages harder to get.
Under the new rules, monthly payments on a second mortgage can now only be up to 40 per cent of the borrower's monthly income, down from the earlier maximum of half .
The measure came two weeks before Chief Executive Leung Chun-ying announced a 10-point policy plan to cool the red-hot market by increasing the supply.
In view of the weakening in the mortgage market, Lau forecast a new round of fierce competition among local banks for mortgage loans in the fourth quarter.
Last month, HSBC topped the list with a 20.2 per cent share of mortgages for finished homes, followed by Hang Seng Bank and Bank of China (Hong Kong).
Despite the weaker purchasing power of consumers as a result of the tougher mortgage policy, Midland Realty director Sammy Po Siu-ming said he expected to see an increase in the number of transactions for flats in the New Territories because they are cheaper.
Under the rules announced last month, end-users buying residential properties valued under HK$6 million would still be eligible for a loan of up to 70 per cent of the value of the property.