Key Information

inSight
Speeches
Speeches by Speaker
Norman T.L. Chan
Peter Pang
Eddie Yue
Arthur Yuen
Zeti Akhtar Aziz
Raymond Li
Edmond Lau
Esmond Lee
Meena Datwani
Vincent W.S. Lee
James Lau
Joseph Yam
Y K Choi
William Ryback
David Carse
Tony Latter
Andrew Sheng
Hans Genberg
Simon Topping
Michael Taylor
The Honourable Donald Tsang
Chen Yuan
Dai Xianglong
Don Brash
Jaime Caruana
Andrew Crockett
Mario Draghi
David Eldon
Stanley Fischer
Timothy F. Geithner
Stephen Grenville
Kenneth G. Lay
William McDonough
Ernest Patrikis
Glenn Stevens
Jean-Claude Trichet
Tarisa Watanagase
Zeti Akhtar Aziz
Carmen Chu
Alan Au
Press Releases
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Press Releases by Category
Bogus Voice Message Phone Calls
Banking in Hong Kong
Fraudulent Websites, E-mails and Telephone System, and other fraud cases
Granting of Banking Licences
Exchange Fund
Table of Multiples of Notes and Payments for Allotted Amount under non-competitive tender
Table of Multiples of Notes and Payments of Application Amount under non-competitive tender
Tender of Exchange Fund Bills and Notes
Tender Results of Exchange Fund Bills and Notes
Tentative Issuance Schedule for Exchange Fund Bills and Notes
Appointments and Departures
HKMA Pay Review
HKMA Publications
Speeches
The Hong Kong Mortgage Corporation
Hong Kong Note Printing Limited
Hong Kong Institute for Monetary Research
Exchange Fund Investment Limited
Others
Hong Kong Financial Infrastructure
International Relations
Investment Products Related to Lehman Brothers
Monetary Policy
Notes and Coins
Renminbi business
Credit Card Lending Survey
Monetary Statistics
Residential Mortgage Survey
Year 2000
Others
Guidelines and Circulars
Guidelines
Circulars
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
515.5995

Press Releases

Prudential Supervisory Measures for Mortgage Lending

The Hong Kong Monetary Authority (HKMA) issued today (Friday) a circular to the banks requiring them to implement the following measures to strengthen risk management in residential mortgage lending business:

  1. Lowering the maximum loan-to-value (LTV) ratio for residential properties with a value at HK$12 million or above from 60% to 50%.
  2. Lowering the maximum LTV ratio for residential properties with a value at or above HK$8 million and below HK$12 million from 70% to 60%, but the maximum loan amount will be capped at HK$6 million.1
  3. Maintaining the maximum LTV ratio for residential properties with a value below HK$8 million at 70%, but the maximum loan amount will be capped at HK$4.8 million.2
  4. Lowering the maximum LTV ratio for all non-owner-occupied residential properties, properties held by a company and industrial and commercial properties to 50%, regardless of property values.

The above measures take effect immediately. But loan applications in respect of transactions where a provisional sale-and-purchase agreement for the property was signed on or before 19 November will not be affected.

Mr Norman Chan, the Chief Executive of the HKMA, said "The global financial environment is now in a rather abnormal state. Under the present environment in which interest rates are exceptionally low and there is a huge amount of excessive liquidity, many investors may easily overlook the fact that the income level of Hong Kong people is increasingly trailing the property prices. We are very concerned that the housing market and consequently the mortgage market will become even more exuberant, thereby exposing the banking system to higher risks. As the gate-keeper of Hong Kong's banking system, the HKMA must introduce appropriate prudential measures in a timely manner to ensure that our banks adopt the necessary risk management standards and practices, and to make our banking system more resilient to shocks, so as to dampen the damage that would be inflicted by the bursting of the asset bubble."

"It is not enough to rely solely on the measures introduced by the Government. The entire community must heighten their awareness of the risks that lie ahead. It is essential that we do not overstretch ourselves by borrowing beyond our means, bearing in mind that interest rates will one day return to more normal, but significantly higher levels. We must learn from the experience of the bursting of the last asset bubble and work together in order to avoid a recurrence of the very difficult situation."

For media enquiries, please contact:
Peggy Lo, Manager (Communications), at 2878 1687 or
Natalie Wu, Officer (Communications), at 2878 8246

Hong Kong Monetary Authority
19 November 2010

1This is to avoid the anomaly that a purchaser of a property with a value slightly below HK$12 million could borrow a larger amount of loan than a purchaser of a property with a value slightly above HK$12 million. For example, a purchaser of a property valued at HK$11 million could borrow HK$6.6 million (HK$11 million x 60%), while a purchaser of a property valued at HK$12.5 million would only be able to borrow HK$6.25 million (HK$12.5 million x 50%).

2This is to avoid the anomaly that a purchaser of a property with a value slightly below HK$8 million could borrow a larger amount of loan than a purchaser of a property with a value slightly above HK$8 million. For example, a purchaser of a property valued at HK$7.5 million could borrow HK$5.25 million (HK$7.5 million x 70%), while a purchaser of a property valued at HK$8.5 million would only be able to borrow HK$5.1 million (HK$8.5 million x 60%).

Last revision date: 1 August 2011
ABOUT THE HKMA
The HKMA
Tender Invitations
Careers@HKMA
Legislative Council Issues
Links
The HKMA Information Centre
KEY FUNCTIONS
Monetary Stability
Banking Stability
International Financial Centre
Exchange Fund
PUBLICATIONS & RESEARCH
Annual Report
Half-Yearly Monetary & Financial Stability Report
Quarterly Bulletin
HKMA Background Briefs
Reference Materials
Research
MARKET DATA & STATISTICS
CMU Bond Price Bulletin
Economic & Financial Data for Hong Kong
Monthly Statistical Bulletin
Monetary Statistics
KEY INFORMATION
Press Releases
Speeches
Guidelines & Circulars
Forthcoming Events
inSight
OTHER INFORMATION
Information in Other Languages (Bahasa Indonesia, हिन्दी, नेपाली, ਪੰਜਾਬੀ, Tagalog, ไทย, اردو)
Account Opening
Consumer Corner
Consumer Education Programme
Complaints about Banks
Complaints about SVF Licensees
Internet Banking
Fraudulent Bank Websites, Phishing E-mails and Similar Scams
Be Careful of Bogus Phone Calls and SMS Messages
Authenticate the Callers and Bank Hotline Numbers
Register of AIs & LROs
Register of Securities Staff of AIs
Register of SVF Licensees
Investment Products Related to Lehman Brothers
Photo Gallery