Hong Kong Mortgage Corp. (HKMC) chief executive Raymond Li Ling-cheung said the property market is about to peak and start declining amid rising home supply in the market and expected interest rate hikes in the United States.
However, a market plunge is unlikely as the government and regulators have taken steps to maintain financial stability, Li told the Hong Kong Economic Journal in an interview.
“It’s expected to be a gradual adjustment and transaction volume will remain active,” he said.
The agency issued more than HK$20 billion (US$2.58 billion) worth of bonds last year to gear up for potential challenges that might require it to step in and take over mortgage assets from lenders in cases of market turbulence.
Every once in a while there would be a crisis requiring swift response from the agency, Li said, citing the Asian financial crisis in 1997, the dotcom bubble burst in 2000, the SARS epidemic in 2003 and the collapse of Lehman Brothers in 2008.
A peaceful market environment, on the other hand, would weigh on the agency’s performance, he said.
The HKMC has warned of a 20 percent slide in profit as lenders find little reason to sell their mortgages amid strong liquidity in the market and increased competition in the mortgage insurance business.
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