ANALYSTS expect the new round of bank mortgage lending tightening to hurt property prices in the short term. But they believe the sobering effect of the moves will benefit the territory's over-heated property market in the long term. Hongkong Bank, worried about rocketing prices at the top end of the market, has cut the maximum mortgage lending ratio from 60 per cent to 50 per cent for buyers of homes worth more than $5 million. The advance ratio for properties worth less than $5 million remains at 70 per cent. The Hang Seng Bank has taken a slightly different approach. It has cut its maximum mortgage lending ratio to 50 per cent for units worth more than $7 million. Properties worth between $5 million and $7 million would be granted mortgages on a sliding scale between 70 and 50 per cent, the bank said. Both banks have also announced higher mortgage lending rates for properties worth more than $5 million, hoping to drive speculators out of the market. ''This will be negative for the short-term profitability of property companies but good for the long-term health of the property market,'' said Nomura Research Institute manager Nicholas Pang. ''If prices go up much further it would not be good for the property market. I would be happy to see the speculative element driven out.'' Mr Pang noted that Japanese prices had tumbled after the breaching of the public affordability level. Analysts have estimated that average mass market prices rose around 20 per cent last year. However, Hang Seng Bank deputy chief executive Alice Lam yesterday suggested the figure could be as high as 35 per cent. S.G. Warburg Securities (Far East) director Michael Green said he expected the new measures to help slow residential property price rises at all levels of the market. Rocketing values at the top end of the market have been dragging up prices in cheaper sectors. There might also be some nominal knock-on effect on rents, Mr Green said. He thought some speculators might be forced into default positions by higher borrowing rates. He pointed in particular to small estate agents, who frequently buy pre-sale flats in new developments to sell on at a quick profit. Percy Au-Young, research director of DBS Securities (Hong Kong), said property stocks had been looking for an excuse to correct after recent gains. Property stocks have recently been outperforming the Hang Seng Index, helped by strong capital values and rental rises. Banking analysts lauded the move to control the risk on mortgage loans, which have been occupying an ever-larger share of the banks' loan portfolio. ''Immediate impact on the banks' profitability is minimal, because the two banks have been gradually cutting down their exposure since the middle of last year,'' said Andy Kong, an analyst at Sung Hung Kai Securities.