THE Hongkong Bank has denied speculation that it intends to tighten mortgage lending for residential properties, less than six months following the imposition of restrictions. There has been speculation that the Hongkong Bank and the Hang Seng Bank may reduce mortgage financing levels from 60 per cent to 50 per cent for some luxury residential properties and tighten selection procedures. The Hongkong Bank may seek to withdraw from mortgage lending altogether, according to a source. Jan McNally, associate director of estate agents Richard Ellis, said the two banks were likely to reduce mortgages for luxury residential properties which were more than five years old, to 50 per cent. According to the latest quarterly review from Richard Ellis, the maximum mortgage lending rate available now from the two banks is 60 per cent. However, a spokesman for the Hang Seng Bank said its upper limit was flexible, depending on conditions of the mortgage. David Faulkner, senior partner at Brooke Hillier Parker, said banks may be ready to impose stricter selection procedures to weed out speculators. Pamela George, assistant manager of external relations at the Hongkong Bank, dismissed speculation that the bank intended to withdraw from the mortgage business. ''We are Hong Kong's largest retail bank and mortgages are a major part of our retail banking business and so people can draw whatever conclusions they like from that,'' she said. Asked earlier whether the Hongkong Bank proposed to tighten mortgage lending, she said the bank had not planned any announcements and although it constantly reviewed mortgage lending policies the bank was keen to take speculation ''off the boil''. A spokesman for the Hang Seng Bank declined to comment. Property experts believe banks are planning to tighten mortgages. Mrs McNally deduced the speculation contained ''a certain truth if the banks are denying it''. Mr Faulkner said it was well known within the property industry that banks believed they were overweight in residential mortgage lending and may be looking to develop other forms of lending. Virginia Wai, director at Colliers Jardine, believed banks wanted to reduce exposure to mortgage lending because ''the property market is really really crazy''. The Richard Ellis report observed that capital values of luxury homes ballooned 41 per cent in 1993. High prices would not be dampened by further mortgage restrictions, Mr Faulkner said. The reduction of Hongkong Bank and Hang Seng Bank maximum lending rates from 70 per cent to 60 per cent in August for properties valued over $5 million had cooled the market, he added. Ms Wai said tighter mortgage lending may slow down the property market initially but not in the long term. However, she expected such a move to affect end-users more than speculators. To clamp down on speculators more effectively, Mr Faulkner said it was possible the banks would tighten selection policies by rejecting potential customers looking to buy property for investment or intending to take out a second mortgage.