The quality of mortgage loans soured slightly last month, with the delinquency ratio edging up to 0.19 per cent from 0.18 per cent in September - the first time the index has inched upwards in more than two years. Lau Shun-chuen, an assistant general manager and head of personal financial services at Hang Seng Bank, attributed the rise of the 90-day delinquency ratio to a decline in the value of mortgages which produced a lower comparable base. 'I don't think it's a long-term indication of mortgage quality as the economy's fundamentals are still in good shape.' According to the Hong Kong Monetary Authority's latest figures, the outstanding value of mortgage loans decreased by 0.3 per cent to $536.8 billion over the month. The HKMA's survey also showed the rescheduled loan ratio declined to 0.35 per cent from 0.36 per cent in September; the combined ratio was unchanged at 0.54 per cent in October. However, the value of new home loans drawn down by borrowers fell for the fifth consecutive month as a series of interest rate rises kept buyers out of the market. New loans drawn down fell by 7.9 per cent to $7.8 billion. New loans approved dropped 2.1 per cent to $9.6 billion after a fall of 1.6 per cent in September. The HKMA attributed the fall in new loan approvals to secondary market transactions falling 8.7 per cent to $659 million which more than offset the increase of $444 million, or 38 per cent, in approvals for the primary market. Brian Cheung Nam-chung, a senior manager at Liu Chong Hing Bank, said the series of interest rate rises that had pushed the prime lending rate from 5 per cent at the start of the year to the current 7.5 to 7.75 per cent, was the major factor affecting the property market. 'The property market will remain sluggish as the interest rate rise cycle hasn't been completed. US interest rate will rise by another 0.5 to 0.75 percentage point before reaching their peak,' he said. The proportion of new loan approvals for fixed rate mortgages has expanded to 8.4 per cent from 1.9 per cent in the higher interest rate environment, while the proportion of new loans priced at more than 2.25 per cent and up to 2.5 per cent below the best lending rate increased to 33 per cent in October from 27 per cent in September.