'Little impact' of mortgage tweak

Top News | Jane Cheung and Kevin Xu 21 Oct 2019

The lifting of the mortgage cap is a "technical adjustment" and will not have a long-lasting impact on property prices, says Shih Wing-ching, co-founder of Centaline Property Agency.

Speaking at City Forum yesterday, Shih said the policy will primarily affect smaller flats preferred by first-time homebuyers.

His comments came after many residential flat owners postponed plans to sell units - and instead are hoping for a price rebound - after Chief Executive Carrie Lam Cheng Yuet-ngor announced a lift of mortgage ceilings for first-time homebuyers in her policy address last week.

For first-time buyers, loans will be available at 90 percent for properties worth up to HK$8 million - double the previous cap of HK$4 million. In addition, the ceiling on prices for an 80 percent loan was lifted to HK$10 million from HK$6 million.

"In fact, the old cap for a 90 percent mortgage at property worth HK$4 million has been outdated for a long time, because you can barely find flats selling at HK$4 million," he said.

"The government hadn't adjusted this policy before because estate values were still on the upward trend but it's the right time to do it as we expect an economic downturn."

Vincent Ng Wing-shun, a member of the former Task Force on Land Supply, said many youngsters cannot afford to buy flats because prices remain too high.

"It's not like you give them a sum of money to buy properties. You only allow them to loan more, which means they'll have to pay a larger sum of installment every month," he said. "The problem is not solved, the sum they have to pay for a property won't become smaller."

Ng added: "This is not a solution to solve the problem in the long run as the core issue still lies in a shortage of land supply."

Vera Yuen Wing-han, an assistant lecturer at the University of Hong Kong's Faculty of Economics, said raising the mortgage cap only benefits people with an average monthly income of some HK$70,000 and will have a limited effect on the overall property market.

Secretary for Development Michael Wong Wai-lun said technical studies for redeveloping three squatter areas in Kowloon East - Chuk Yuen United Village, Ngau Chi Wan Village, and Cha Kwo Ling Village - with potential for 6,300 public housing units, will be finished within two years.

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