Mixed reaction to latest measures to cool Hong Kong property market
HKMA tells lenders to put greater weighting on credit worthiness, while cutting amount of allowable loans on residential and commercial properties
Hong Kong property stocks were mixed on Monday after the government tightened mortgage measures for the second time in a week to cool the overheating market, taking aim at borrowers with multiple loans and whose income sources come from outside the city.
After the markets closed on Friday, the Hong Kong Monetary Authority ordered commercial banks to allocate a larger risk weighting towards their assessment of credit worthiness, while cutting the amount of allowable loans on residential and commercial properties.
The amount of loans allowed for residential property less than HK$10 million in value was also cut to 50 per cent of their value for borrowers with outstanding mortgages from 60 per cent, while lending to homes exceeding HK$10 million was cut to 40 per cent from 50 per cent.
In addition, companies that are buying homes for corporate use had their loan amounts cut to 40 per cent of value, from 50 per cent.
“Tightening property measures by the government have become unexpectedly frequent,” said Hannah Li, strategist at UOB.
“But stocks didn’t drop so sharply as the latest move is aimed at overseas buyers and investors only rather than real users, so the overall impact is not going to be that significant.”