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Press Releases

The Hong Kong Mortgage Corporation Limited Mortgage Insurance Programme

The Hong Kong Mortgage Corporation Limited (HKMC) announced today (Thursday) that the new product which will provide insurance cover for equitable mortgage loans secured on residential properties under construction will be formally launched on Friday 27 April 2001. The Corporation has briefed the participating banks on the eligibility criteria and the processing procedures.

The new product will provide insurance cover for equitable mortgage loans with loan-to-value (LTV) ratios of up to 85%. Eligibility criteria are set out in the technical note at Annex A. Further expansion of the programme to cover loans with LTV ratios of up to 90% will be considered later in the light of the feedback from banks and the performance of the loans under the expanded programme.

Starting from 27 April, interested homebuyers may contact any of the banks listed in Annex B to apply for insurance cover for equitable mortgage loans with LTV ratio of up to 85%. Further information may also be obtained through the HKMC Hotline (2536-0136) or on the HKMC website (http://www.hkmc.com.hk).

The Hong Kong Mortgage Corporation Limited
26 April 2001

 

Annex A

MORTGAGE INSURANCE PROGRAMME
FOR EQUITABLE MORTGAGE LOANS

Technical Note

Framework

Under the Mortgage Insurance Programme (MIP) the HKMC provides mortgage insurance to Approved Sellers for an amount up to 20% of the value of the property, allowing the banks to lend up to a 90% loan-to-value (LTV) ratio without taking on additional risks. The Corporation has decided to expand the range of eligible products under the programme to include equitable mortgage loans secured on residential properties under construction, up to an LTV ratio of 85%.

Eligible Mortgage Originators

  • All Approved Seller/Servicers of the HKMC.
  • HKMC will reserve the right to terminate the arrangement with individual Approved Sellers if their mortgage underwriting standards are considered not satisfactory.

Eligibility Requirements

Every equitable mortgage loan applying for insurance under the Programme must meet the eligibility requirements comprising:

  • Mortgage Conditions as set out in the Mortgage Insurance Operational Manual for Equitable Mortgages; and
  • Core Eligibility Criteria set out below.

Eligibility Criteria for Equitable Mortgages Under the Mortgage Insurance Programme

Maximum loan size at origination Floating Rate : HK$5,000,000
FARM : HK$4,000,000
Eligible Properties
  • The property development project must be covered by the Consent Scheme administered by the Lands Department of the Hong Kong SAR Government.
  • The property development project is scheduled for completion within a period of 12 months.
Loan-to-value determination:
  • Maximum loan-to-value ratio (LTV) at origination
  • Valuation report
85%
(The financed premium may cause the LTV to go slightly over 85%) Written valuation report prepared by internal professionals or qualified external surveyors. The valuation must take into account incentives given by the property developer to the buyer and the value of the incentives must be deducted from the purchase price.
Debt-to-income ratio calculation:
  • Maximum debt-to-income ratio at origination
50%
Inclusive of all debt obligations of the borrower(s), and any rental payments that the borrower(s) have to make during the construction period. Income of guarantor will not be accepted for computing the DTI ratio.
Employment eligibility Mortgagor/borrowers who are non-salaried are in general not eligible. This criterion does not apply to certain categories of professionals such as doctors, accountants and lawyers.
Owner occupancy requirement Declaration of self-occupancy at the time of origination as well as within 3 months after the completion with documentary proof. Thereafter, subject to annual certification until the expiry of the insurance coverage.
Maximum original term to maturity 30 years

 

Annex B

LIST OF PARTICIPATING BANKS

  1. AIG Finance (Hong Kong) Limited
  2. American Express Bank
  3. Asia Commercial Bank
  4. Bank of America (Asia)
  5. Bank of China
  6. The Bank of East Asia
  7. Chekiang First Bank
  8. The China State Bank
  9. Chiyu Banking Corporation
  10. Citibank
  11. CITIC Ka Wah Bank
  12. Dah Sing Bank
  13. Dao Heng Bank
  14. DBS Kwong On Bank
  15. First Pacific Bank
  16. Fortis Bank Asia HK
  17. Hang Seng Bank
  18. The Hongkong Chinese Bank
  19. The Hongkong and Shanghai Banking Corporation
  20. Hua Chiao Commercial Bank
  21. Inchroy Credit Corporation Limited
  22. Industrial and Commercial Bank of China (Asia)
  23. International Bank of Asia
  24. Kincheng Banking Corporation
  25. The Kwangtung Provincial Bank
  26. Liu Chong Hing Bank
  27. Nanyang Commercial Bank
  28. The National Commercial Bank
  29. ORIX Asia Limited
  30. Overseas Trust Bank
  31. Po Sang Bank
  32. Shanghai Commercial Bank
  33. Sin Hua Bank
  34. Standard Chartered Bank
  35. United Chinese Bank
  36. Wing Hang Bank
  37. Wing Lung Bank
  38. The Yien Yieh Commercial Bank
Last revision date: 1 August 2011
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