bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

SCMP Reporter

TWO of the territory's largest banks, Hongkong Bank and Hang Seng Bank, will lower the mortgage lending ceiling for civil servants in a move certain to anger potential home buyers and baffle government officials.

  Civil servants fear the gap between their purchasing power and property prices will be widened further, and warn of a negative impact on morale.

  A senior Civil Service Branch official questioned the effectiveness of the move, which the banks say is designed to curb property prices.

  The decision has intensified civil servants' calls for increased government loans to use as down payments to buy flats.

  Civil servants currently eligible for two government housing subsidy schemes can get a preferential mortgage loan of up to 90 per cent from the two banks.

  But this will be lowered to 70 per cent from next month, a ratio which applies to all other customers.

  The interest rate, however, remains one percentage point lower than the market mortgage rate, currently at 8.25 per cent.

  As Hongkong Bank has lowered the mortgage ratio for apartments priced at more than $5 million further to 60 per cent, civil servants will be treated in the same way. This does not apply to Hang Seng Bank.

  The two banks will also scrap the favourable mortgage rate - 0.5 to 0.75 per cent lower than market rate - to civil servants not in the government schemes.

  About 2,400 civil servants in the middle to senior ranks will be affected each year, according to government estimates. The range of the prices of properties involved is between $3 million and $5 million.

  More than two-thirds of the applications are made to the two banks.

  ''We truly feel that properties are over-priced. The new measures will help to hold them down to a level affordable by normal users,'' said Alice Lam, general manager of Hang Seng Bank.

  There are no immediate plans to lower the 70 per cent mortgage ceiling for ordinary flats.

  The Deputy Secretary for Civil Service, Fanny Law Fan Chiu-fun, said she could not understand the two banks' decision.

  ''If their move is to reduce speculation, the change may not have much effect because the number of civil servants involved in property transactions is very small every year,'' Mrs Law said.

  ''But we shouldn't lose sight of the fact that the banks want to put civil servants on par with the public, and I have to stress that it is wholly a commercial decision.''   She believes that those who will be hardest hit by the revised policy will be newly recruited or recently promoted officers.

  She refused to be drawn on the extent of the impact on the civil service, but said they would be monitoring the situation closely.

   The vice president of the Hongkong Chinese Civil Servants' Association, Wong Kong-sang, said they were disappointed by the banks' decision because the risk of accepting mortgages from civil servants was lower than for other clients.

  ''The change will only increase our burden, as many officers can barely afford to buy flats,'' Mr Wong said.

  A middle-ranking officer said that while he had bought a flat on 90 per cent mortgage, he was still surprised by the banks' move.

  ''It is really a great shock to us and will no doubt affect the morale of the civil servants,'' he said outside the Central Government Offices yesterday.

  ''This, in turn, will adversely affect the efficiency of the Government.''   He thought it was naive of the Government and the banks to believe the change would halt property speculation.

  ''The decision is made at the expense of our benefits, but it will prove to be futile, since we do not account for a significant percentage of all the property owners.''   Another officer of seven years' standing said the move would prevent civil servants from buying their own flats, and their morale would be further eroded.

  While he did not plan to buy a flat, he saw no reason why civil servant benefits should be taken away.

  ''However, we must understand that it is ultimately a commercial decision made by the two banks, and I do not believe that the Government has exercised much power to interfere.''   Mrs Law revealed that the Government was reviewing the amount of the subsidy, and would consider the banks' changes.

  One of the schemes was introduced in 1990 to encourage civil servants to buy their own flats and give up their quarters.

  But staff representatives have repeatedly demanded a raise in the allowance to catch up with inflation.

  Mr Wong said the down payment loan should be increased to 30 per cent of property price, or 24 months of an applicant's salary.

  The loan is currently capped at 20 per cent of property price, or 18 months' salary.

        ''If the amount remains at the present level, I don't see there is any attraction for civil servants to join the scheme, which will defeat its purpose,'' Mr Wong said.



Banks' move hits civil servants