Residential Mortgage Survey Results for Mar. 1997

New mortgage lending continued to slow down in March according to the results of the latest monthly survey conducted by the Hong Kong Monetary Authority ("HKMA").

Gross new loans made during the month fell by 10.6% to $16.8 billion, compared with a drop of 8.9% in February. The average size of new loans also dropped to $1.74 million compared with $1.83 million in February.

The fall in gross loans made, coupled with a rise in repayment of loans in the month (which increased by 15% to $11.3 billion), resulted in a slower rate of growth of outstanding mortgage loans - 1.6% in March compared with 2.7% in February.

The average rate of growth of outstanding loans in the three months to March also decreased to 30.1% (annualized) from 34.3% in the three months to February. But the average change over the last twelve months remained unchanged at 22.0% in March.

On the other hand, new loans approved during the month rose by 17.0% to $21.1 billion, in line with the revival of primary market activity in March. Loans approved during the month but not yet drawn also increased by 29.7% from $10.9 billion in February to $14.1 billion in March.

"The slower pace of new mortgage lending in March was a reflection of seasonal factors in February. Loan demand accelerated again in March as more new properties were put up for sale, but there are indications that market conditions have since cooled," said Mr David Carse, Deputy Chief Executive of the HKMA. "Despite this we see no need for change to our existing guidelines on loan to value ratios for different types of properties," he added.

The monthly survey also shows that the price-cutting on mortgages further intensified in March. Of new loans approved during March, 53.3% had a margin of 0.25% above best lending rate, compared with 44% in February.

Gross new loans for the purchase of properties in China increased to $195 million in March from $93 million in February. The amount of outstanding loans increased by 0.98% to $6.6 billion.

RESIDENTIAL MORTGAGE LOANS IN HONG KONG
(33 institutions)

GROSS NEW LOANS MADE DURING THE MONTH

NEW LOANS APPROVED DURING MONTH

NEW LOANS APPROVED BUT NOT YET DRAWN

Remarks: The significant fall of outstanding balance in December 1994 was due to the effect of reclassification, securitization and sale of loans by some institutions.

Hong Kong Monetary Authority
25 April 1997