Residential Mortgage Survey Results for June 1998

Mortgage activity in June continued at the more moderate pace of recent months according to the HKMA monthly survey on residential mortgage lending.

The amount of gross new loans made fell slightly by 1.5% from $9.53 billion in May to $9.38 billion in June (compared with the 7.3% decrease in May). The average size of new loans decreased to $1.68 million in June compared to $1.69 million in May.

New loans approved during the month increased by 10.1% to $11.56 billion ($10.50 billion in May). The bulk of this reflected activity in the primary market. Loans approved during the month but not yet drawn also rose by 11.1% from $6.63 billion in May to $7.36 billion in June.

The amount of outstanding mortgage loans increased by 0.78% in June, compared with 0.68% growth in May. The annualised rate of growth of outstanding loans in the three months to June dropped to 8.9% from 11.7% in May. The average change over the last twelve months decreased to 16.9% from 19.0% in May.

On the pricing front, mortgage rates eased with only 38.9% of new loans granted at more than 1% above best lending rate (compared with 58.1% in May). There was a significant increase in the amount of loans granted at 75 basis points above best lending rate (from 5.4% in May to 22.9% in June). This also reflects the current dominance of primary market activity.

The HKMA has begun from June to collect new items of information in its monthly survey. The main features are:

• the loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) was 0.29% as at June 1998.
• the average loan-to-value ratio of new mortgage loans approved in June was 59.86% and the average contractual life was 230 months.
• 99.3% of the new loan approvals were for owner-occupied properties which suggests that the market is largely end-user driven at present.

"The new survey information on the delinquency ratio confirms the continuing high quality of residential mortgage loans," said Mr. David Carse, Deputy Chief Executive of the HKMA.

Gross loans for the purchase of properties in Mainland China increased slightly from $121 million in May to $128 million in June. The amount of outstanding loans decreased marginally by 1.03% to $7.89 billion.

Hong Kong Monetary Authority

28 July 1998

* An earlier survey of 24 local institutions conducted as at end-March 1998 produced a figure of 0.34%. The slight decline in the figure for end-June reflects differences in the number of institutions in the two samples and a different reporting basis. It does not indicate an underlying improvement in the overdue position between end-March and end-June.

Residential Mortgage Loans in Hong Kong

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.