Hong Kong’s move to cut maximum LTV for self-used homes to slightly boost mid-end property demand – Morgan Stanley

 

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The Hong Kong Monetary Authority (HKMA) last week relaxed the maximum loan-to-value (LTV) ratio for self-used residential properties and after the policy change, up to 70% can be borrowed for buying residential properties valued at HK$15 million or less and 60% for properties valued between HK$15 million to HK$30 million, both increasing from 50%, though the ratio for residential properties valued over HK$30 million will remain at 50%.

Morgan Stanley said in a note that residential properties under HK$12 million accounted for 88% of total real estate transaction volume in Hong Kong last year, and that buyers could already borrow up to 80% to 90% through mortgage insurance, so they were not affected by the latest policy. 

The policy adjustment can slightly boost the demand and volume of mid-end properties, and that rising interest rates and the poor performance of the Hang Seng Index remain the main headwinds for Hong Kong’s residential market in the near term, the broker said.

Morgan Stanley is most bullish on the retail market, followed by the office and residential markets within the property sector.