The government-funded fixed-rate mortgage pilot scheme helped Dao Heng Bank record double-digit growth in its mortgage business in August from July. The bank said yesterday that stripping this out, its normal floating-rate mortgages remained flat last month on an enlarged July base boosted by rapid growth in new loans for buyers of Cheung Kong (Holdings)'s launch of Tierra Verde apartments in Tsing Yi. General manager Paul Wong Hok-leung said home-buyers' concern about a possible discontinuation of the government-subsidised fixed-rate mortgage scheme invited a rush of last-minute applications. During the six-month pilot scheme which ended this month, Dao Heng Bank approved $1.1 billion in fixed-rate mortgages, comprising 80 per cent of the $1.4 million quota offered by the Hong Kong Mortgage Corp (HKMC). These mortgages will not be carried on the books of Dao Heng Bank or other banks participating in the scheme, but will be sold to the HKMC on a loan-by-loan basis once they are drawn down. The HKMC recently announced it would extend the scheme by offering an additional quota of $3.5 billion and increasing the number of participating banks from two to eight. Mr Wong said Dao Heng would not pro-actively persuade home-buyers to borrow fixed-rate mortgages because of the products' previous encouraging response. He pointed out that banks should be responsible for explaining clearly the differences in risks home-buyers would face once they decided to borrow at the fixed or floating rate. In addition, home-buyers who funded their purchase by a combination of mortgages from banks and co-financing from either the government or the developers were not eligible to borrow at a fixed rate. This restriction prevents banks growing their fixed-rate mortgage business from buyers who fund part of their purchases by any of the three government home-purchase subsidy plans. These plans include the Home Starter Loan Scheme and the Sandwich Class Loan Scheme provided by the Housing Society, and the Home Purchase Loan Scheme by the Housing Authority. Mr Wong said Dao Heng Bank's experience showed home-buyers who purchased flats of a greater value tended to borrow at floating rates.