Any move by the Hong Kong Monetary Authority to intervene in the mortgage price war could have a negative impact on the banking industry, according to a senior Citibank executive. Chan Tze-ching, the bank's country corporate officer, said banks had regulations to monitor the market, making any guidelines to cool the price war unnecessary. 'Self-regulating is much preferable,' Mr Chan said. HKMA chief executive Joseph Yam Chi-kwong is considering whether to issue guidelines to banks in the wake of the heavy competition for mortgage business. Competition has intensified in recent weeks, with some banks offering loans at 2 percentage points below the prime rate of 8.25 per cent. The HKMA is concerned that any further downward adjustment would expose banks to higher risks, because the prospect for interbank rates staying at low levels remains uncertain and margins are again being squeezed. Competition in the mortgage market has intensified because of a severe contraction in corporate lending. Companies remain reluctant to borrow because of high real interest rates and the continued sluggishness of the underlying economy, according to analysts. Earlier this month, the authority said refinancing loans accounted for $2.3 billion, or 25.7 per cent of the new loans approved, indicating a decline in new lending business. Mr Chan said he did not expect a further drop in mortgage rates, as they were already very low. He said lending in other sectors would improve and reliance on mortgage business would shift once the economy picked up, adding that lending in industrial and commercial business would pick up if the pace of recovery was in line with the Government's expectation. BANKING