HKMA says it regularly reviews mortgage stress tests
The Hong Kong Monetary Authority (HKMA) on Monday said it reviews the market regularly to see if it needs to ease stress test requirements for mortgages to support homebuyers. Speaking after appearing at a Legco panel meeting, the authority's chief executive, Eddie Yue, said a number of factors are considered before any adjustments are made.  “These include the housing price level, the housing turnover, the local and global economic environment, the labour market in Hong Kong, wage changes, etc. We take account of these factors and look at the various policies from time to time,” he said. Yue noted that in September 2022, the authority reduced the stress test requirement to ensure that mortgage applicants could cope with a two-percentage-point increase in rates, rather than three percentage points previously. During the panel meeting, lawmakers raised concerns regarding “call loans” given the city's growing number of negative equity cases, with banks able to demand repayments from borrowers at any time. In response, the HKMA’s deputy chief executive, Arthur Yuen, said as long as borrowers continue to service their debts, banks won't ask for immediate repayments simply because of a change in the value of collateral. Separately, Yue said the risks from bad loans remain manageable for banks. “Currently, the total non-performing loan ratio of the banks is only around 1.6 percent, we thought that this amount is still manageable, especially considering that the capital adequacy ratio of Hong Kong banks remains high, at more than 20 percent, given that the profitability of banks in 2023 was still very strong,” he said.