>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Hong Kong has eased mortgage rules for some homes to make them more affordable for first-time homebuyers and to make it easier for owners to trade up, relaxing the city’s property curbs for the first time since 2009 to kick-start a slumping market.
Eddie Yue, Chief Executive at Hong Kong Monetary Authority (HKMA), announced that the loan-to-value ratio (LTV) caps for self-occupied residences are relaxed under the condition of controllable risks.
For properties worth below $15 million, the LTV cap is relaxed to 70%; for properties between $15 million and $30 million, the LTV cap is relaxed to 60%; and for properties above $30 million, the LTV cap remains intact, effective immediately, said Yue.
The LTV cap for non-self-occupied residences remains unchanged at 50%.
Overseas investors, defined as those deriving their incomes outside the city, also received an incentive. They will be eligible for up to 50% to 70% mortgage loan financing like local buyers after the HKMA scrapped a rule that banks will offer them a mortgage loan-to-value ratio at 10 percentage points below that offered to local buyers.
“We have no intention to encourage overseas buyers in the market, but the policy is changed as we found it is no longer needed based on the market situation,” the HKMA said.
The plan comes two weeks after Hong Kong’s Financial Secretary, Paul Chan Mo-po, told the local legislature that the government would consider “marginally relaxing” the loan-to-value ratio, to strike a “balance [between] financial stability and the interest of first-time homebuyers”.
Chan wrote in his blog on Friday that a 12 per cent decline in prices from the 2021 peak, the interest rate upcycle and a weak economy had made room for the new relaxation aimed at lessening the burden of local owner-occupiers.
He ruled out the relaxation of cooling measures aimed at suppressing speculation and investment. “The fine-tuning this time is not the prelude or variation of relaxation in cooling measures in any way,” Chan said.