Hong Kong Mortgage Corporation mulls rate cut, start-up loan expansion

The Hong Kong Mortgage Corporation (HKMC) may cut the interest rate and increase the size of loans offered by its microfinance scheme in June in a bid to encourage more people to start up new businesses.

The scheme, which offers loans of up to HK$300,000 at an annual interest rate of 9 per cent, has been criticised as too expensive and too limited. Financial Secretary John Tsang Chun-wah said in his budget speech in February that he would ask the government-owned HKMC to expand the scheme to encourage more start-ups.

HKMC senior vice-president Stanley Chan Tat-keung said inquiries about the microfinance scheme had doubled in the wake of Tsang's comment.

Chan said the HKMC was studying a wide range of measures to improve the scheme when its pilot period ended in June.

"We are thinking of a number of enhancements from June," he said. "This includes cutting the interest rate for the scheme, lifting the HK$300,000 cap on loans, and simplifying the application process."

Since the microfinance scheme was launched in 2012 the default rate has been about 6 per cent.