Cheung Kong

Cheung Kong counters curbs with 90 per cent mortgage loan offer

PUBLISHED : Tuesday, 03 March, 2015, 10:39pm
UPDATED : Wednesday, 04 March, 2015, 8:55am

The strategy by Cheung Kong (Holdings) and mortgage broker mReferral to offer a home loan of up to 90 per cent to help buyers for its upcoming project in Hung Hom beat the tougher curb imposed last Friday and will serve as a gauge of the outlook for the market this year.

The aggressive financing scheme proved effective as the developer registered about 900 prospective buyers for the first batch of 108 units at La Lumiere. The project will go on sale on Saturday, the first new launch after the latest round of credit tightening by the authorities.

"The sale response will serve as a market indicator," said Alvin Lam Tsz-pun, a director at Midland Surveyors, adding that it would also reflect whether the tougher mortgage policies would affect buying interest.

Sammy Po Siu-ming, the chief executive at Midland Realty's residential department, said the tightening would eliminate investors with weak financial ability. "Only a few will seek a 90 per cent loan-value ratio. About 40 per cent of the prospective buyers are investors rather than end-users," he said.

Only a few will seek a 90 per cent loan-value ratio. About 40 per cent of the prospective buyers are investors rather than end-users
Sammy Po Siu-ming, Midland Realty

Kerry Properties will also release 100 units at its luxury project, Dragons Range, in Sha Tin for sale on Saturday.

Last Friday, the Hong Kong Monetary Authority announced a cap on the loan-value ratio for homes under HK$7 million at 60 per cent, down from 60 to 70 per cent. Buyers will thus need to fork out a higher down payment.

Homebuyers will find it more difficult to borrow as the lending measures, which took effect immediately, also lowered the maximum debt-service ratio, or the borrower's monthly repayments as a percentage of monthly income, from 50 per cent to 40 per cent.

On Monday, the HKMA further tightened the rules on additional mortgage finance, requiring that the maximum debt-service ratio be applied not only to mortgage loans, but to the total liability of the applicants, including any additional mortgage financing from whatever source.

Yesterday, the Land Registry announced the total number of registered transactions, including apartments, shops and car parks, saw a month-on-month fall of 3 per cent to 8,060 last month. The total value recorded a decline of 11.3 per cent to HK$47.59 billion.

Centaline Property Agency believes total transactions in the secondary market will drop to about 3,000 next month from 4,158 in February, "mainly because buying demand was hurt by the tighter mortgage rules".