New mortgage activity continued to slow in September according to the results of the latest monthly survey conducted by the Hong Kong Monetary Authority (HKMA).
New loans approved during the month dropped by 22.9% to $19.8 billion, reflecting the reduced market activity in July and August. Loans approved during the month but not yet drawn also decreased by 33.4% from $17.7 billion in August to $11.8 billion in September.
Gross new loans made during the month increased slightly by 2.1% to $25.4 billion, after a drop of 23.3% in August. The average size of new loans remained unchanged at $2.13 million in September. Repayment of loans dropped by 13% from $15.87 billion in August to $13.81 billion in September. As a result, the amount of outstanding mortgage loans rose by 2.9% to $419.0 billion in September, compared to the 2.3% increase in August. This reflected the continuing influence of loan approvals granted when market conditions were more buoyant.
The annualised rate of growth of outstanding loans in the three months to September increased to 41.8% from 41.2% in August. The average change over the last twelve months increased to 34.0% from 31.7% in August.
On the pricing front, mortgage rates continued to harden in September. Of the new loans approved during September, 23.7% were priced at best lending rate, well below the 37.1% in August. Loans granted at more than 0.25% above best lending rate increased significantly to 40.1% in September from 20.9% in August, indicating the upward trend of mortgage rates. This should continue into October as more banks have announced that their mortgage rates would be raised.
"The reduction in loan approvals over the last two months is likely to lead to slower growth in the amount of outstanding loans in the months ahead", said Mr. David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority. "The recent rise in prime rate and the move by some banks to increase their mortgage rates are also likely to slow loan demand for the rest of the year."
Gross loans for the purchase of properties in Mainland China fell slightly to $283 million in September from $285 million in August. The amount of outstanding loans increased by 2.40% to $7.30 billion.
Hong Kong Monetary Authority
29 September 1997
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Sep-97
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Aug-97
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HK$m
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HK$m
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33 Authorised Institutions
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1.
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Gross new loans made during month
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a. Amount of new loans
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25,452
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24,917
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b. Monthly change in amount
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2.1%
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-23.3%
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c. Number of new loans
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11,928
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11,712
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d. Average size of new loans
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2.13
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2.13
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2.
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New loans approved during month
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a. Amount of approvals
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19,831
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25,711
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b. Monthly change in approvals
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-22.9%
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-23.7%
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c. Number of approvals
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9,688
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11,691
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d. Average size of approvals
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2.05
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2.20
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By Property age
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Property age - 15 years or below
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- amount
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16,299
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21,727
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- number
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7,561
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9,489
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Property age - above 15 years
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- amount
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3,532
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3,983
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- number
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2,127
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2,202
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Associated with co-financing schemes
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- amount
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403
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906
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- number
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130
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324
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3.
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New loans approved during month
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but not yet drawn
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a.
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Amount of approvals
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11,791
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17,693
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b.
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Number of approvals
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5,766
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7,859
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4.
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Amount of outstanding loans
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a.
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Amount of loans
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419,020
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406,916
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b.
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Monthly change in loans
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2.9%
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*
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2.3%
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c.
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Twelve-month change in loans
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33.6%
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*
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31.1%
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d.
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Average monthly changes over
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last three months (annualized)
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41.8%
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*
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41.2%
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last twelve months (annualized)
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34.0%
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*
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31.7%
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Associated with co-financing schemes
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- amount
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14,646
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13,925
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- number
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7,234
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7,049
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5.
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Interest margin on new loans approved during month
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a.
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At BLR
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23.7%
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37.1%
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b.
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More than 0% and up to 0.25% above BLR
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30.7%
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36.1%
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c.
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More than 0.25% and up to 0.5% above BLR
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27.0%
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14.0%
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d.
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More than 0.5% and up to 0.75% above BLR
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8.0%
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4.3%
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e.
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More than 0.75% above BLR
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5.1%
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2.6%
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f.
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Others
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5.4%
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4.1%
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* Figures are adjusted for the effect of reclassification of residential mortgage loans by 2 institutions amounting to HK$ 461 million
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.
