HKMA eases lending rules for property buyers
The Hong Kong Monetary Authority on Wednesday said it is suspending the stress test requirement for mortgage borrowers, and allowing them to take out a larger mortgage as it eases lending rules. The HKMA said the maximum loan-to-value ratio for homes for self-use worth HK$30 million or less - which account for 98 percent of local home transactions - will be adjusted to 70 percent, and for those worth HK$35 million or above it will be 60 percent. The ratio for non-self-use homes and non-residential properties will be raised to 60 percent and 70 percent respectively. HKMA Chief Executive Eddie Yue said the authority had considered a range of factors, including falling property prices, and determined the risk is now lower for local banks who lend money to homebuyers. He said they are also suspending the interest rate stress testing requirement that assumes a 200-basis-point rise in the mortgage rate, since the US Federal Reserve said the rate hike cycle might be coming to an end. "I would like to stress that even with these adjustments announced today, the Hong Kong banking sector has ample buffers to cope with any challenges from a sharp correction in property prices," he said. "We believe making appropriate adjustments to the countercyclical measures can lessen their impact on the public in buying or selling properties." The HKMA said the changes are effective immediately and apply to transactions with provisional sale and purchase agreements signed on Wednesday or afterwards.