Residential Mortgage Survey Results for March 1999

New mortgage lending rebounded in March, according to the HKMA's monthly survey of residential mortgage lending.

The amount of gross new loans made in March increased by 30.5% to $9.4 billion from $7.2 billion in February (compared with the 16.1% decrease in February). The average size of new loans decreased to $1.44 million in March from $1.46 million in February.

New loans approved during the month surged by 56.6% to $12.5 billion ($8.0 billion in February). Loans approved during the month but not yet drawn also rose by 39.4% from $6.2 billion in February to $8.6 billion in March.

The average loan-to-value ratio of new loans approved was 58.9% (57% in February) and the average contractual life was 219 months (212 months in February). 99.4% of these loans were related to owner-occupied properties.

Despite the revived market activity, the amount of outstanding mortgage loans increased by a modest 0.52% in March, compared with 0.35% growth in February. This reflected a rise of 25.7% to $7.0 billion in repayment of loans. The annualised rate of growth of outstanding loans in the three months to March declined further to 4.9% from 7.9% in February. The average change over the last twelve months also dropped to 7.9% from 8.8% in February.

The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) rose to 1.13% as at March 1999 (compared with 1.07% in February).

On the pricing front, competition intensified with 84.8% of the new loans granted at the best lending rate plus 0.25% or below (compared with 70.3% in February). In particular, the portion of new loans granted at the best lending rate surged to 62.6% in March from 33.7% in February.

"Given the increase in new loan commitments in the month, the amount of outstanding loans is expected to grow at a somewhat faster pace in April. Banks are reminded not to relax their prudent lending criteria amid keen competition for mortgage businesses," said Mr. David Carse, Deputy Chief Executive of the HKMA.

Gross loans for the purchase of properties in Mainland China increased from $18 million in February to $70 million in March. The amount of outstanding loans decreased by 1.97% to $7.3 billion.

Hong Kong Monetary Authority

30 April 1999

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Notes to Annex