Expansion of the Mortgage Insurance Programme

The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce today (28 December) the expansion of the Mortgage Insurance Programme (MIP) to cover loans secured by non owner-occupied residential properties.

Since the launch of the MIP in March 1999, the Corporation has adopted a proactive and prudent approach to expand the eligibility criteria and product range of the MIP to meet the requirements of banks and homebuyers. Over the years, the MIP has assisted over 42,000 homebuyers to realise their aspiration for homeownership. The homeownership rate in Hong Kong has improved from 51% in 1999 to 58% in 2006.

In response to market demand and after thorough discussions with the MIP participating banks and reinsurance companies, the HKMC decides to extend insurance coverage under the MIP to non owner-occupied residential properties that meet a set of tightened eligibility criteria.

The enhanced product will provide mortgages on non owner-occupied residential properties with a loan-to-value (LTV) ratio up to 85% and a loan amount of up to HK$8 million with maximum tenor at origination of 40 years. The detailed eligibility criteria and insurance premium levels for non owner-occupied residential mortgage loans are set out at Annex A and the premium table at Annex B respectively.

Mortgage insurance on non owner-occupied residential properties is popular in overseas countries. Such arrangement is welcome by property buyers who wish to make a long-term investment with a steady rental income stream.

Mr James H. Lau Jr., Chief Executive Officer of the HKMC, noted that "the HKMC has been proactive in enhancing the product range of the MIP in order to best meet the diverse needs of borrowers and to borrow from overseas experience as appropriate. The new enhancements to the MIP are in tune with the development of the mortgage market in Hong Kong by providing more options to borrowers."

The HKMC will accept applications for this new product with effect from 31 December 2007. Enquiries may be directed to the HKMC hotline at 2536-0136 or any participating banks for further information.

Annex

The Hong Kong Mortgage Corporation Limited
28 December 2007