Date
22 November 2017
First Credit Finance chairman Checkley Sin (L) says there are not many cases of fourth mortgages in Hong Kong's housing market, while Gale Well CEO Jacinto Tong (R) thinks otherwise. Photos: HKEJ
First Credit Finance chairman Checkley Sin (L) says there are not many cases of fourth mortgages in Hong Kong's housing market, while Gale Well CEO Jacinto Tong (R) thinks otherwise. Photos: HKEJ

Fears of crash in small-sized homes segment overblown: experts

Experts from the loan and property sectors in Hong Kong have dismissed a warning by Jacinto Tong Man-leung, the chief executive of Gale Well Group, that the market for small-sized apartments in the city could see its bubble getting burst as early as three months from now.

Tong said on Monday that the market could go bust amid potential loan calls as there has been a rise in the number of fourth mortgages. He believes that there are as many as 12,000 cases of buyers taking fourth mortgages in Hong Kong.

But other industry observers say problem may be exaggerated.

First Credit Finance Group (08215.HK) chairman Checkley Sin Kwok-lam says 900 financing firms in the city are actually inactive, and that about 400 firms are held by brokerages for margin financing purposes, the Hong Kong Economic Journal reported Wednesday.

Only 100 licensed financing firms actually engage in the sub-mortgage market, he said. And of those, the really active ones number only 30 to 40. 

The total number of fourth mortgages in Hong Kong does not exceed 100 cases, the First Credit chief said, noting that Tong is an investment veteran but not an expert on the mortgage and credit sector. 

Edward Chan Kai-ho, chairman of Oi Wah Pawnshop Credit Holdings (01319.HK) said it is very rare to see fourth mortgages, and that debt providers did not have any call-loan actions recently.

Hang Lung Properties (00101.HK) chairman Ronnie Chan Chi-chung also sees the mass market having little chance of a collapse, given the generally reasonable mortgage ratio.

Tong on Monday warned that the mass property market in Hong Kong may go bust in three to six months amid potential massive loan calls.

The investment guru, who has been until now known for his bullish view on the property market, said many small financing firms are looking at calling in their loans soon. Tong estimated that there are some 1,200 financing firms in the city that be could engaged in the sub-mortgage business.

The number of home units where buyers have taken a fourth mortgage may total at least 12,000, a situation that could trigger a crisis should a collapse occur in the mass market, he said.

Translation by Vey Wong

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