Move seen as shift from price war Hong Kong homebuyers will be able to get 40-year mortgages for the first time under new loan plans offered by the government-run Hong Kong Mortgage Corp. HKMC, which works in partnership with banks in granting housing loans, is extending the maximum loan tenor of its mortgage insurance programme (MIP) from 30 to 40 years, the longest in the market. The move is seen as part of intensifying competition for mortgage customers. MReferral Mortgage Brokerage Services, which also partners banks on home loans, yesterday said it would start to offer plans with interest rates as low as 4.75 per cent for the full term, the lowest among similar loan packages. 'I think competition will further intensify as banks would like to get more business, especially as the property market has been active recently,' said Kenneth Tsin Wai-lun, a senior mortgage distribution manager at Bank of East Asia. New home loans approved last month rose 57.4 per cent from February to HK$16.3 billion, Hong Kong Monetary Authority data shows. The number of property transactions in the secondary market might exceed 7,000 this month, after increasing 3.8 per cent to 5,879 deals by Tuesday from 5,662 last month, according to real estate agent Hong Kong Property. Mr Tsin expected lenders to launch products with different features to attract customers, rather than just cutting prices. HKMC chief executive James Lau said yesterday the agency extended the loan tenor of MIP to provide a wider choice for potential homebuyers. Borrowers seeking a tenor longer than 30 years under the MIP would have to meet stringent requirements, such as the sum of the property age and the loan tenor should not exceed 60 years, compared with 70 years for a 30-year tenor. The premium will be between 6 per cent and 15 per cent higher than the current MIP premium. The premium charged on MIP loans of up to 30 years stands at 1 per cent to 3.98 per cent. MReferral, which said it partnered a bank to offer mortgages to homebuyers referred by Midland Realty and Hong Kong Property, is offering a plan at prime rate (7.75 per cent) minus three percentage points, or 4.75 per cent, for a loan amount of HK$2.5 million or larger. Full-term mortgage rates range from 4.82 to 4.85 per cent, although some banks offer cash rebates to lure customers. A banker said if cash rebates were taken into account, there would not be much difference in the absolute rate. 'There's not much room for lenders to cut mortgage rates further,' he said. DBS Bank yesterday launched a mortgage plan targeting homebuyers who were below 35 years old. The plan allows borrowers to reduce the repayment amount in the first 10 years of a 30-year loan and increase it in the last 20 years. Separately, HKMC reported a 13.5 per cent growth in after-tax profit last year to HK$682.7 million, the highest since it was established in 1997.