Residential Mortgage Survey Results for July 1997

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

Gross new loans increased during the month by 27.3% to $32.5 billion. The average size of new loans increased to $1.94 million compared with $1.88 million in June.

Repayment of loans also increased sharply by 20.5% in July but at a slower rate than loan growth. As a result, the amount of outstanding loans increased by 3.9% to $395.4 billion in July, compared to 2.7% growth in June.

The annualized rate of growth of outstanding loans in the three months to July increased to 43.9% from 35.8% in the three months to June. The average change over the last twelve months increased to 29.8% in July from 26.6% in June.

New loans approved during the month rose by 6.9% to $33.7 billion. New loans approved but not yet drawn dropped slightly from the record high level of $20.4 billion in June to $19.5 billion in July.

The trend of price cutting continued in July. Of new loans approved during July, 36.6% were priced at best lending rate, compared with 31.8% in June. Loans granted at 0.25% above best lending rate dropped further to 42.9% in July from 46.9% in June.

"The rapid growth of mortgage lending in July is a reflection of market conditions as they were in May and early June", said Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority. "The property market has since cooled and demand for new loans seems to have slowed in August. Nevertheless, outstanding loans in August may continue to grow quite rapidly because of loan approvals already in the pipeline. In view of this, the recent move by some banks to increase their mortgage interest rates is prudent."

Gross loans for the purchase of properties in mainland China increased to $369 million in July from $181 million in June. The amount of outstanding loans increased by 3.42% to $6.98 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
28 August 1997