The Hong Kong Monetary Authority (HKMA) has issued guidelines to banks on a new round of prudential measures for property mortgage loans.
The measures include:
1. Raising the risk-weighted floor by 10 percent to 25 percent for new residential mortgage loans granted after May 19, 2017;
2. Lowering the applicable loan-to-value ratio (LTV) cap by 10 percentage points for property mortgage loans extended to borrowers with one or more pre-existing mortgages, in addition to the existing requirement of lowering the applicable debt servicing ratio (DSR) limit by 10 percentage points;
3. Lowering the applicable DSR limit by 10 percentage points for property mortgage loans extended to borrowers whose income is mainly derived from outside of Hong Kong, in addition to the existing requirement of lowering the applicable LTV cap by 10 percentage points.
The measures take immediate effect.
HKMA chief executive Norman Chan said, the “risk of overheating in the property market in Hong Kong continues to increase”.
He said prospective buyers must be mindful of their ability to cope with the potential risk that may arise from possible changes in the property cycle as well as mortgage interest rates.
Chan said the HKMA will continue to monitor the property market closely, and will introduce appropriate counter-cyclical measures to safeguard the stability of the banking system.
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