Rise in big mortgages offered by Hong Kong developers to speed up sales raises default fears
Some developers are offering loans of up to 85 per cent of a property’s value, just as interest rates are set to rise and property prices to fall
The number of Hong Kong developers providing mortgages for homebuyers hit a record in the second quarter of this year, raising concerns over a possible rise in defaults should an increase in interest rates and falling prices hurt sentiment in the world’s most expensive property market.
Builders offering financing to buyers accounted for 17.4 per cent of total mortgage deals for new flats from April to June, up from 6.5 per cent in January to March, according to data from mReferral Mortgage Brokerage Services on Wednesday.
“It is the highest since we started gathering data in 2015,” said Sharmaine Lau, chief marketing officer at mReferral.
In May alone, nearly three out of every 10 mortgage deals for new flats, or 32.9 per cent, were financed by developers, the research showed. According to the Hong Kong Monetary Authority’s latest data, mortgage loan financing in the primary market amounted to HK$18.5 billion (US$2.4 billion) from April to June.
Developers typically offer financing plans that are much higher than the standard mortgage ceiling of 60 per cent of the value for flats below HK$10 million and 50 per cent for those above that figure, with some offering as much as 80 or 85 per cent of a property’s value.