Banks tighten scrutiny of mortgage loans to workers as jobs in virus-hit sectors on the line
- Lenders have become less inclined to approve mortgage applications from borrowers working in the retail and tourism sectors, analysts say
- Banks see those industries as most vulnerable to job losses as the health crisis crimps demand for their services
As the likes of Cathay Pacific, Sa Sa International and Regal Hotel cut jobs and put more on the line amid a slump in business, banks have been tightening their scrutiny or rejected mortgage-loan applications from the afflicted sectors, some industry professionals said.
“More banks are exercising restraint in granting mortgages to borrowers employed in these high-risk sectors,” said Raymond Chong, managing director at mortgage referral brokerage StarPro Agency, declining to identify the lenders. “One bank has already thrown in the towel, ditching applications from borrowers employed in the airline service industry.”
Banks approved HK$24.9 billion (US$3.2 billion) of new mortgage loans in January, shrinking every month from HK$45.3 billion in August, according to data published by the monetary authority.
The tightening of credit assessments comes as cracks in the economy widened, raising concerns the property bubble will burst if the pandemic pushes the global economy into a recession.
Lenders contacted by the South China Morning Post said they are vetting mortgage applications according to guidelines.