Property investors led Hong Kong stocks lower yesterday on reports the Government was considering additional restrictions on mortgage lending. Caution over interest rates was another excuse for profit-taking on developers, brokers said. Red chips also cooled as investors digested the massive gains seen in recent days. Supporting the market were covered call warrants on laggard blue-chip stocks. The Hang Seng Index closed down 34.48 points at 14,540.16, a loss of 0.23 per cent. Turnover eased to $17.92 billion, compared with a record-high $20.58 billion on Monday. Henderson Land saw the sharpest losses among property developers, falling 2.9 per cent to $75.25. Cheung Kong and New World Development also closed lower. The Hong Kong Monetary Authority said new mortgage loans surged 35.2 per cent last month, sparking fears that the Government may step in to cool the property market. Deputy chief executive David Carse said: 'Additional restraints in lending policies may be required.' With the US Federal Reserve last week leaving interest rates unchanged, concern is mounting that rates may increase this summer. New China HK Securities head of trading Eddie Chan said: 'People believe they will raise interest rates next time so property went down a bit.' Red chips consolidated for the first time in more than a week. China Merchants Hai Hong fell 5.38 per cent to $13. Before yesterday's losses, the stock had risen 73 per cent in five trading days. Guangdong Investment edged lower despite announcing it would buy timber assets from its mainland parent. Shanghai Industrial and China Resources were also off sharply. The market was prevented from falling further by a number of covered call warrants set on laggard blue chips. Wharf and Hysan Development both made gains on the back of warrants. Also seeing continued interest were red-chip financial plays Union Bank and Ka Wah Bank. Both are being boosted by speculation of asset injections from mainland parents. The handover is also expected to increase their trade finance businesses. Elsewhere, Mansion Holdings edged lower despite posting a more than 1,000 per cent rise in profit for the year ended December 31, 1996. The market is expected to remain volatile before the expiry of the May index futures contract tomorrow. Red chips should be active with Beijing Enterprises' debut also due tomorrow.