Hong Kong property

Hong Kong home buyers seeking highest mortgages since 2008

PUBLISHED : Tuesday, 28 June, 2016, 12:02am
UPDATED : Tuesday, 28 June, 2016, 12:02am

Hong Kong home buyers are seeking larger mortgages, with lending now at an eight-year high as home prices continue rising, according to the mReferral Mortgage Brokerage Services.

The mortgage broker says 35.1 per cent of its clients are now opting to borrow between 70 and 90 per cent of their purchase value — the highest proportion since its started researching the market in January 2008.

“That reflects just how high home prices remain,” said Kostka Cheung, mReferral’s chief operating officer.

It measured mortgages being obtained through banks or finance companies, and not those provided by developers.

Cheung said most of the loans were being offered to first-time buyers for flats worth below HK$6 million.

Under existing rules, first-time home buyers can receive a maximum 90 per cent loan-to-value, or LTV, through the Mortgage Insurance Programme for properties worth less than HK$4 million and an 80 per cent LTV for those worth up to HK$6 million.

The latest figures come as Hong Kong Monetary Authority last week expressed concern that aggressive mortgage lending by developers to boost sales could indirectly increase the potential credit risk faced by banks, with officials urging greater vigilance among lenders.

On June 17, Cheung Kong Property announced it will provide a 123 per cent mortgage to entice buyers for its Yuccie Square development in Yuen Long.

Sun Hung Kai Properties earlier offered mortgages of as much as 120 per cent of a unit’s value, to push sales of its Park Yoho Venezia project in Yuen Long. That deal only applies to buyers who already own an apartment with a value of no less than 70 per cent of the purchase price of the new flats.

mReferral said 81.5 per cent of home buyers signed up for a 30-year mortgage term last month, compared with 83.3 per cent in March, which was also a record high.

“Many home buyers have needed to extend their loan term to 30 years before they pass the stress test, which calculates payments, in the event of interest rates increasing by three percentage points,” he said.

In addition, it said mainland buyers of Hong Kong flats rose for the third consecutive month to 10 per cent last month, the highest level since November, 2013.

“Home demand among mainland buyers continues to grow and they are mainly focused on buying new flats,” he said.

To mark the 19th anniversary of Hong Kong’s handover to the mainland, mReferral has released a mortgage loan at 1.5 percentage points above the Hong Kong interbank offered rate, at 1.73 per cent.

The promotion compares with the general rate of 2.15 per cent, or 3.1 per cent below prime, which stands at 5.25 per cent.