The Hong Kong Mortgage Corp's (HKMC) $7.5 billion mortgage portfolio had no loans overdue for more than three months as at the end of October, outperforming the overall market in terms of asset quality. Set up in November last year, the corporation purchases mortgage loans from banks to reduce their risk in the property market. The HKMC then repackages its mortgage-loan portfolio into mortgage-backed securities to sell in the market at a later stage. In its first bimonthly report, the HKMC said at the end of October loans more than one month overdue accounted for just 0.16 per cent of its portfolio while there were no loans more than three months overdue. This is lower than the figure for the 33 authorised institutions in Hong Kong, according to the latest Hong Kong Monetary Authority survey which showed a ratio of 0.68 per cent of loans overdue for more than three months as at the end of October. To maintain the quality of its mortgage assets, the corporation only buys residential mortgages from 31 approved banks. It also has strict purchasing criteria, under which the outstanding mortgage loan size must be lower than $5 million, borrowers must not use more than half of their income to repay the debt and the property must be occupied by the owner. The corporation was very active in October, buying about $2.3 billion in mortgage loans during the month and taking the value of mortgage loans purchased to $7.5 billion. At the end of October, the average loan size of the HKMC's mortgage portfolio was $1.34 million, with a gross mortgage rate of 10.5 per cent. The average mortgage ceiling for the portfolio is 63.1 per cent, while the borrowers' debt-to-income ratio - the percentage of income the borrowers use to repay the loan - is 37.8 per cent. More than 80 per cent of the portfolio were floating-rate loans linked to the local prime rate, while the rest were fixed-rate mortgages.