Government officials have defended the latest move by the Hong Kong Monetary Authority (HKMA) to tighten the mortgage loan rules, saying steps were needed to reduce the risks in the system.
It is the duty of authorities to carry out market adjustments during any extreme environment, Financial Secretary John Tsang Chun-wah said, according to the Hong Kong Economic Journal.
Homebuyers should evaluate their present and future ability in fulfilling their mortgage repayment obligations, given the expected rise in interest rates as the United States will raise its rates sooner or later, Tsang said.
In an attempt to cool down mounting home prices and property loan risks, the HKMA tightened the mortgage ratio for lower-priced residential properties to 60 percent.
External economic environment and psychological expectation are important factors, apart from supply and demand, in determining the trends in the property market, Development Secretary Paul Chan Mo-po said.
He was responding to concerns expressed by some observers that the new rules will force people to live in homes of even more smaller sizes, as mortgages become unaffordable.
On Friday, the HKMA unveiled a new round of supervisory measures with regard to property mortgages. The maximum loan-to-value ratio for self-use residential properties with value below HK$7 million was lowered by 10 percentage points to 60 percent.
That means homebuyers will have to shell out more in down-payments.
Netizens have been criticizing the new rules, saying that the regulations will push people to the rental market and away from home purchases.
Ceajer Chan Ka-keung, Secretary for Financial Services and the Treasury, said the new rules are aimed at dealing with rising home prices in the mass-market, a segment that has decoupled from economic fundamentals.
Translation by Vey Wong
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