Mortgage-refinancing activities intensified last month, drawing HSBC and Hang Seng Bank into the home-loan price war. Statistics released by the Hong Kong Monetary Authority show refinancing loans accounted for 40.2 per cent of total new home loans made during the month, up from 35.6 per cent in September. Bank of America (Asia) director and executive vice-president Charles Ma Chi-man said this percentage figure might have overstated the severity of refinancing activities during the month. This was because the new home loans fell 8.3 per cent from September to $8.12 billion. With a smaller base, the percentage figure will automatically rise even if the number of refinancing loans stayed more or less the same. However HSBC and Hang Seng Bank - the two biggest players in the SAR home loans market - have now been drawn into the mortgage price war. Both banks are offering a package with three options: At one percentage point below prime for the first three years and at prime from the fourth year onwards; At prime for the loan's whole life plus an up-front cash rebate equal to 1.5 per cent of the loan amount; or At half a percentage point below prime for the first five years and at prime from the sixth year onwards, plus an up-front cash rebate equal to 0.5 per cent of the loan amount. Hong Kong Monetary Authority (HKMA) deputy chief executive David Carse said the HKMA letter of October 29 warning banks against excessive competition was enough action for the moment. 'We can't keep on issuing letters every month,' he said. Mr Carse said, however, there were signs showing the price war might moderate in the near future. He said as the economy recovered, banks would have more commercial lending opportunities, rather than concentrating their efforts on one or two products. Bank of America's Mr Ma said the property market had shown signs of picking up recently after news of the mainland's imminent entry to the World Trade Organisation, and better-than-expected economic growth in the third quarter. About 89.3 per cent of last month's new loans were granted at the prime rate, down from 90.4 per cent in September. Loans granted at below prime the whole term, however, grew to 1.9 per cent of the total new loans, up from 1.1 per cent. The loan-delinquency ratio - the ratio of mortgage loans overdue for more than three months to total outstanding mortgage loans - rose to 1.16 per cent from 1.12 per cent in September. MORTGAGE LENDING