ABN-AMRO Bank has stunned the market with preferential terms for flat buyers. The terms include a cut in the widely supported and observed standard mortgage rate. While most banks are tightening mortgage policies to contain exposure to the property market, ABN-AMRO has been one of the first to use interest to lure flat buyers because it sees easing prices as a golden opportunity. The bank's mortgage loan package includes a cut of 0.5 percentage point in the standard mortgage rate for the first year. The standard rate is 1.75 percentage points above the prime lending rate. The repayment period also is stretched from the normal 20 years to 25 years. Even flats more than 15 years old can secure a 70 per cent loan rather than the 60 per cent offered by other banks. 'We believe we can expand this business based on calculated risk,' said Chan Wai-kit, assistant general manager and head of the consumer banking division. Focusing primarily on end-users, and strictly observing the 70 per cent mortgage ceiling, the terms did not contravene the Hong Kong Monetary Authority's recommended exposure to the property market, he said. Risks were much lower because home prices had fallen 10 to 15 per cent this year. ABN-AMRO's package launched this month is expected to draw business from market leaders, but hardest hit will be deposit-taking companies which in recent years have found a niche market by offering mortgage on old residential blocks. One such firm is listed JCG Holdings, which prices its old-unit mortgages at prime plus four percentage points. ABN-AMRO is offering 2.5 points over prime even on 25-year-old units. The bank's aggressive mortgage strategy reflects a longer-term expansion plan into consumer finance and into the Asia-Pacific region as a whole. Shifting focus from purely commercial banking with trade finance as a major source of income, the bank recently revamped its internal organisation to form five divisions - corporate, commercial, consumer and private banking, and treasury. 'Starting from almost nothing, mortgage lending is expected to shoot up to 20 to 25 per cent of our loan portfolio. We have plenty of room,' Mr Chan said. Other consumer financing such as tax loans, personal loans and credit cards are well in the pipeline. The bank is constrained by the legacy of being a trade finance bank with only eight branches throughout Hong Kong. but expansion is high on the agenda. Other arms of the bank also have been put into full gear.