The 70 per cent mortgage ceiling for banks will remain, despite a motion by legislators calling for it to be scrapped. Lawmakers last night passed a motion moved by Liberal Party chairman James Tien Pei-chu, who called for the Hong Kong Monetary Authority to relax guidelines that prevent banks from lending more than 70 per cent of the property value to homeowners. Secretary for Financial Services and the Treasury Frederick Ma Si-hang, however, insisted that the ceiling was a long-term policy aimed at ensuring the stability of the banking sector. Mr Ma said homebuyers could still get a 90 per cent mortgage by paying for mortgage insurance from the Hong Kong Mortgage Corporation (HKMC). 'HKMC has improved the speed of its approvals and streamlined the process of applications for the 90 per cent mortgage insurance for customers,' Mr Ma said. A similar motion by Mr Tien in 1998 failed because many legislators feared the risk was too high for the banks. But this time, the Democratic Alliance for Betterment of Hong Kong (DAB) and many non-affiliated legislators supported the removal of the cap. 'Property prices have fallen by 62 per cent from their peak in 1997 and the public's ability to make property loan repayments has increased. This has reduced the risk of default on mortgage loans,' Mr Tien said. He said the relaxation of the 70 per cent mortgage ceiling would help homebuyers, stimulate more transactions in the secondary property market and help to prop up property prices. Banking legislator David Li Kwok-po opposed the removal of the cap, saying it might lead to more bad debt. Democratic Party economic affairs spokesman Albert Ho Chun-yan said the party opposed Mr Tien's motion, but asked the government to lower the mortgage insurance price which now represented about 3 per cent of the property value. Some legislators also said the insurance was too difficult and time-consuming to apply for. Mr Ma, however, rejected any intervention, saying the price of mortgage insurance was a commercial decision. HKMC said it had rejected only 1 per cent of applications since the scheme was introduced in 1999, and 12,300 borrowers had purchased the mortgage insurance.