Hong Kong to see sales of bigger flats slow down, as interest rate rise counters mortgage relaxation
- Impact of latest easing in home loans will not be as strong as previous instances, as Hong Kong is heading for an interest rate rise, JLL executive says
- The sales momentum for bigger flats will slow down as seen previously in October 2019: Ricacorp executive
The relaxation of mortgages for more expensive flats in Hong Kong will propel sales in the short term only, as an imminent interest rate hike will keep potential buyers away, industry insiders said.
The sales of lived-in homes worth between HK$10.01 million (US$1.3 million) and HK$12 million jumped by 57 per cent to 199 deals in March, according to Ricacorp Properties data, after Financial Secretary Paul Chan Mo-po on February 23 allowed loan-to-value ratios of 80 per cent for mortgages of homes worth up to HK$12 million from the previous HK$10 million limit. Following his intervention, the down payment for a home worth HK$12 million dropped to HK$2.4 million from HK$6 million previously.
The number of deals for this price category registered its best monthly performance in March, the data shows.
“But the impact of the latest easing in home loans will not be as strong as previous instances, as the city is heading for an interest rate rise, which is likely to increase borrowing costs,” said Joseph Tsang, chairman of JLL in Hong Kong. The fifth wave of the coronavirus pandemic, which has devastated Hong Kong’s economy, could also hurt sentiment, he added.