With the US Federal Reserve embarked on a rate-tightening cycle that will affect Hong Kong’s red-hot property market, it is as good a time as any to remind housing market participants of the virtues of prudence, no matter how ample market liquidity may be now. This is effectively what the Hong Kong Monetary Authority has done with a pre-emptive tightening of lending rules to reduce banks’ credit risks.

Apart from requiring a larger risk weighting for new residential mortgages, the measures are largely targeted at lending to those who already have loans and those who derive most of their income from outside Hong Kong. But all borrowers should heed the caution implicit in these measures, the eighth round of tightening since 2014, following a record rise in property prices and transactions in March. Some analysts see them as a clear signal that the government is prepared to take further action to cool the market.

The HKMA chief executive, Norman Chan Tak-lam, said interest margins on mortgage lending would come under growing pressure in the longer term, which would impact on earnings from the business and on banks’ ability to cope with a market downturn.

The new measures may not make a dramatic difference, since locals still account for most of the market, and many mainlanders among those who derive income outside the city do not need to take out a mortgage.

The most important effect is therefore more likely to be psychological, in ensuring that people remain mindful of the interest-rate cycle, with the Fed having signalled two more rate rises this year and projecting eight or nine by 2019. Indeed borrowers should be prepared for the Hong Kong authorities to announce further cooling measures in the coming weeks.