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 Newly approved home loans surged last month on the back of brisk activity in the property market, Hong Kong Monetary Authority data shows.

Bankers, however, predict a reversal from this month onwards as a result of a gloomy economic outlook and recent measures to cool the red-hot property market.
The authority said new home loans approved by local lenders last month rose 14.8 per cent from April to HK$31.6 billion. The number of new applications last month increased 15.6 per cent from April to 17,084.
The increase in new loan applications in May reflects more active residential property transactions in May compared with the low volume in April, the HKMA said.
It may also be a result of the low-base effect because of the intervening Easter holidays in April. The number of new applications in May is lower than the monthly new applications between January and March this year.
Chan Tze-ching, senior adviser at Bank of East Asia, said residential mortgage loans approved this month should be much lower than those last month.
The property market has turned much quieter after the HKMA introduced the new measures to tighten residential mortgage loans earlier this month, Chan said.
The authority tightened the loan-value ratio of mortgage loans for properties above HK$6 million. Simultaneously, the government released more land for sale to cool the market after some property transactions in recent months surpassed the 1997 peak.
The effort is beginning to show. Just 150 previously owned flats were sold at 50 housing estates in the week up until Sunday, the lowest in almost 70 weeks. This was 18 per cent lower than the number of flats sold from June 13 to 19, according to Ricacorp Properties.
The property market and mortgage loans are likely to continue to go down in the second half of this year amid the uncertainties facing the global markets, Chan said.
New loans last month for borrowers who bought in the primary market, or new properties sold by developers, increased 27 per cent from April. New loans for those who bought homes in the secondary market increased 17.9 per cent.
The total outstanding value of mortgage loans increased by 1.3 per cent last month to HK$780 billion.


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