Residential Mortgage Survey Results for Apr. 1997

New mortgage lending rose sharply in April according to the results of the latest monthly survey conducted by the Hong Kong Monetary Authority (HKMA).

Gross new loans made during the month increased by 35.2% to a record high of $22.7 billion, compared with a drop of 10.6% in March. The average size of new loans also increased to $1.77 million compared with $1.74 million in March.

The amount of outstanding mortgage loans also rose rapidly by 2.4% in April, compared with a 1.6% increase in March.

The average rate of growth of outstanding loans in the three months to April decreased to 29.4% (annualized) from 30.1% in the three months to March. But the average change over the last twelve months increased from 22.0% in March to 23.1% in April.

New loans approved during the month also rose sharply by 36.4% to $28.8 billion, reflecting the large scale of market activity in March. Loans approved during the month but not yet drawn increased by 22.4% from $14.1 billion in March to $17.3 billion in April.

"The rapid growth of new mortgage lending in April was a result of the active property market in March. Market activity slowed in April itself. However, loan growth seems likely to continue at a rapid pace in May because of the amount of undrawn loan commitments still in the pipeline," said Mr David Carse, Deputy Chief Executive of the HKMA.

Mr Carse added, "The current growth of mortgage lending is historically high and this is resulting in an increase in banks' property exposure. Additional restraint in lending policies may therefore be required."

Price cutting on mortgages further intensified in April. Of new loans approved during April, 55.4% had a margin of up to 0.25% above best lending rate, compared with 53.3% in March while loans granted at the prime rate increased significantly from 0.8% to 14.4%. The latter was associated with the financing of new properties offered for sale in March.

Gross new loans for the purchase of properties in China increased to $238 million in April from $195 million in March. The amount of outstanding loans increased by 0.56% 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
26 May 1997