The 95 per cent mortgage offer is a big attraction Kobe Ho never imagined that purchasing a 1,100-square-foot apartment could be as easy as buying a suit. One afternoon last month, the advertising copywriter was heading home to Cityone Sha Tin when he decided, quite on the spur of the moment, to buy a house - in nearby Pictorial Garden, in a Chinachem Group development. He happened to glance at a promotion poster outside a property agency when an aggressive sales agent came up and persuaded Mr Ho to join him on a quick tour of the site and look at some of the apartments up for sale. 'The incentive package was so attractive I decided to take the flat,' he said. The attraction was the 20 per cent second mortgage offer from the developer, on top of the usual 70 per cent loan offered by banks. In addition, the developer was committed to paying the interest for the first two years. Under the scheme, Mr Ho is not required to pay a cent in mortgage repayment for two years, provided the interest rates remain unchanged. The scheme has given Mr Ho the opportunity to upgrade his two-bedroom flat to a brand-new three-bedroom apartment, and all he has to do is pay just 10 per cent of the price of the property. What is more, the new flat comes with a view - of the Sha Tin racecourse. When he saw what was available, Mr Ho decided to sign up immediately, paying 5 per cent of the property value straight away by credit card. He is now in the process of selling his Cityone flat, and the family of four plans to move into the new home next month. Developers are offering a variety of special schemes and attractions to lure buyers. The most common is the top-up mortgage scheme designed to reduce the purchaser's initial financial burden. During the market doldrums of a few years ago, aggressive incentives for homebuyers included cash rebates, furniture coupons and even diamonds. The latest marketing tool favoured by developers is the 95 per cent mortgage insurance scheme, which dramatically lowers the barriers to buying a home. A buyer wishing to purchase a $1million flat need give only 5 per cent or $50,000 in down payment. This follows last month's decision by the Hong Kong Mortgage Corp (HKMC) to raise the maximum loan-to-value ratio in the expanded mortgage insurance scheme. With banks carrying saving deposits amounting to $3 trillion, developers and banks wasted no time in coming up with an array of preferential financial packages to draw potential buyers into the market. One day after HKMC's announcement to raise the loan-to-value ratio, Swire Properties and Hang Seng Bank came up with a 95 per cent mortgage plan for buyers of Ocean Shores apartments in Tseung Kwan O. Instalment payments and interest are waived for the first nine months. The interest rate for the rest of the term is as low as 2.7 percentage points below prime (5 per cent at present). Sino Land simultaneously teamed up with Hang Seng Bank to offer a 95 per cent mortgage plan - with an interest rate as low as prime minus 4.5 percentage points for the first year and prime minus 2.7 percentage points for the rest of the term - for buyers of Residence Oasis flats, also in Tseung Kwan O. The marketing strategies are paying off. Midland Realty director Jeff Law Kwok-on said the sale response at Ocean Shores was satisfactory, with 20 units sold at between $2 million to $3 million per unit. 'About half of the homebuyers picked the 95 per cent mortgages, which require a small initial down payment,' he said. Meanwhile, Jonas Kan, equity research director at Daiwa International Research Institute, said the 95 per cent mortgages could not be expected to sustain indefinitely the appetite to buy. 'The desire to buy is driven by expectations of an upswing in home prices,' he said. Ricacorp Mortgage Agency director Hendrick Leung said developers and banks had been offering packages with low mortgage rates and cash rebates since the market became depressed in 2001. At present, 28 banks are offering 95 per cent mortgage loans.