New mortgage activity lost momentum in December according to the HKMA's monthly survey on residential mortgage lending.
The amount of gross new loans made in December increased by 28.6% to $13.2 billion from $10.3 billion in November (compared with the 60.5% increase in November). The average size of new loans increased to $1.51 million in December from $1.48 million in November.
New loans approved during the month fell by 24.1% to $11.2 billion ($14.7 billion in November). Loans approved during the month but not yet drawn also decreased by 29.3% from $10.3 billion in November to $7.3 billion in December.
The average loan-to-value ratio of new loans approved was 56.0% (58.8% in November) and the average contractual life was 215 months (218 months in November). 99.3% of these loans were related to owner-occupied properties.
Reflecting the surge in loan approvals in November, the amount of outstanding mortgage loans increased by 1.25% in December, compared with 1.09% growth in November. The annualised rate of growth of outstanding loans in the three months to December increased to 10.5% from 6.8% in November. The average change over the last twelve months also increased to 9.6% from 8.7% in November.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) rose to 0.84% as at December 1998 (compared with 0.78% in November).
On the pricing front, mortgage rates eased further with 33.1% of the new loans granted at the best lending rate plus 0.25% or below (compared with 22.2% in November).
"In view of revived competition for residential mortgage loans, as evidenced by the decline in lending margin, banks are reminded to maintain their credit standards, by adopting prudent lending practices and paying close attention to borrowers' ability to service their debt," said Mr. David Carse, Deputy Chief Executive of the HKMA.
Gross loans for the purchase of properties in Mainland China increased from $78 million in November to $97 million in December. The amount of outstanding loans decreased slightly by 0.78% to $7.65 billion.
Annex
Notes to Annex
- Residential mortgage loans in the survey refer to loans (which include refinancing loans) to private individuals for the purchase of residential properties, including uncompleted flats, but excluding flats in the Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme. Mortgage loans to corporate clients are excluded from the survey.
- Gross new loans made refer to mortgage loans which are actually drawn down during the month.
- New loans approved refer to mortgage loans which are approved during the month. The loans can either be drawn down in the same month or in the following months. The loans which are approved but not yet drawn down are shown under the item "New loans approved during month but not yet drawn". This figure will have implications for the amount of gross new loans made in the following months.
- Mortgage loans are classified as overdue when an instalment payment is overdue for 3 months or more and remains unpaid at the last day of the reporting month. The delinquency ratio is the weighted average of the ratio of the total amount of overdue loans over the total outstanding mortgage loans.
- Co-financing schemes refer to those schemes which involve the provision of top-up loans by the property developer (or other co-financiers) in addition to the mortgage loans granted by banks. Only the portion of loans granted by banks are reported in the survey.
- Average loan-to-value ratio, average contractual life and owner-occupied properties are all weighted average figures, which are weighted by the amount of new loans approved during month by individual banks.
