Mortgage screws tightened on HK home buyers, down payment raised by 10pcHong Kong | 19 May 2017 6:50PM
Residential property buyers planning to borrow to finance their flats face further hurdles imposed on lenders from today.
Borrowers for a second-home mortgage will have to fork up 10 percent more in down payment, the Hong Kong Monetary Authority said today, announcing a new round of restrictions on the residential property market.
Those earning an income outside Hong Kong will also face restrictions on borrowing to buy flats.
Also, lenders are required to put aside more capital in reserves for new mortgage lending.
Property prices increased by 4 percent between December and March this year, while overall flat prices in March exceeded the 1997 peak by 85 percent, the acting government economist said last week.
The HKMA chief executive, Norman Chan Tak-lam said in an announcement, the measures are being imposed as the risk of overheating in the property market continues to increase.
"According to the latest statistics of the Rating and Valuation Department, property prices in March have surpassed the recent peak recorded in September 2015.''
He said the residential transaction volume has increased by more than double from about 3,300 in January to about 7,000 in April.
"Meanwhile, the keen competition for mortgage business in the banking sector has heightened the risk of overheating in the property market, and weakened the resilience of banks to cope with a downturn in the market,'' he cautioned.