THE Government yesterday ruled out stronger intervention to ensure banks toe the 70 per cent mortgage lending rule. The new Secretary for Monetary Affairs, Mr Michael Cartland, stressed that arrangements between banks and developers offering buyers 90 per cent financing were isolated incidents. ''It is not our intention to intensify the degree of intervention,'' he said. At yesterday's Legco Finance, Taxation and Monetary Affairs Panel, the Banking Commissioner, Mr David Carse, said the policy had been effective and major banks still supported it. But property tycoon Mr Li Ka-shing and the president of the Hongkong Society of Real Estate, Mr Michael Choi Ngai-min, called on the Government to relax the limit - saying the rule was proving prohibitive for genuine end-users having difficulty raising enough funds to make 30 per cent down-payments. The administration issued the 70 per cent mortgage rule to banks in November 1991 in a bid to restrain inflationary pressure arising from the growth in property prices and curb speculative activities. The guideline is an informal one and is something which the banks voluntarily adopt. Asked by legislator Mr Martin Lee Chu-ming what contingency plan the Government had if most banks opted not to follow the rule, Mr Cartland said the Commissioner could issue formal guidelines which would empower him to penalise disobedient institutions. But Mr Carse declined to elaborate what kind of punishment that would entail and added that the Government had to be cautious before taking further action. Mr Cartland reiterated that the 70 per cent mortgage lending rule was unlikely to be relaxed in the short or medium-term. ''The circumstances against which the bubble develops are still very much the same,'' he said, adding that low interest rates, high inflation, low unemployment and a buoyant economy were all factors against dropping the ceiling. He said the Government had not stipulated any set of conditions to be in place before initiating any relaxation; but it would look at the exposure of banks to the property sector, the inflation rate and the affordability of first time home purchasers. In a submission to the legislators, the Monetary Affairs Branch said although the guideline had helped to cool the property market and curb speculation, ''it is unclear to what extent the state of the market in October and November was affected by the prevailing political climate and seasonal factors''. Speaking after a trade function yesterday, Mr Li said he believed a lot of would-be buyers were disappointed by the 70 per cent lending ceiling and an 85 per cent ceiling would be a reasonable limit. ''I don't think prices would rise or drop significantly by removing the ceiling . . . Property prices depend on a lot of factors - world economy, politics and the local economy,'' he said. ''Of course, I hope prices would not become out of reach of the general public,'' he added. The tycoon also defended the arrangement between some banks and property developers to offer extra credits to property buyers saying such an arrangement was ''fair'' and ''even the developers have business to do''. But Mr Li admitted property developers had their own financial constraints and such an arrangement could not last for too long. Mr Choi thought the Government was frightened of taking the blame for raising the lending ceiling just in case that encouraged speculators to return to the residential sector and set off another round of spiralling price inflation. ''By just saying 'no' the Government is not addressing the problems we are encountering,'' said Mr Choi. However, two banks from the Bank of China Group thought the mortgage limit should be maintained. Po Sang Bank chairman Mr Chao Shing-on and Kwangtung Province Bank deputy general manager Mr David Lam Yim-nam said they had received no instruction from the group to lift the ceiling. Po Sang Bank's deputy general manager Ms Mak Wai-lan said although property prices had slightly dropped, they were still at a high level.