Residential Mortgage Survey Results for April 1999

New mortgage lending fell but new loans approved continued to increase in April, according to the HKMA's monthly survey of residential mortgage lending.

The amount of gross new loans made in April decreased slightly by 2.6% to $9.1 billion from $9.4 billion in March (compared with the 30.5% increase in March). The average size of new loans decreased to $1.42 million in April from $1.44 million in March.

However, new loans approved during the month increased by 18.9% to $14.8 billion ($12.5 billion in March). Loans approved during the month but not yet drawn also rose by 29.5% from $8.6 billion in March to $11.1 billion in April.

The average loan-to-value ratio of new loans approved was 57.9% (58.9% in March) and the average contractual life was 215 months (219 months in March). 99.7% of these loans were related to owner-occupied properties.

The amount of outstanding mortgage loans increased by 0.54% in April, compared with 0.52% growth in March. The annualised rate of growth of outstanding loans in the three months to April increased to 5.6% from 4.9% in March. The average change over the last twelve months dropped slightly to 7.7% from 7.9% in March.

The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) increased slightly to 1.16% as at April 1999 (compared with 1.13% in March).

On the pricing front, competition further intensified with 91.2% of the new loans granted at the best lending rate plus 0.25% or below (compared with 84.8% in March). In particular, the portion of new loans granted at the best lending rate surged to 83.8% in April from 62.6% in March.

"It appears that the increase in the loan delinquency ratio has moderated to some extent compared with previous months, but it will take a longer time to see whether the deterioration in asset quality has indeed stabilized," said Mr. David Carse, Deputy Chief Executive of the HKMA.

Gross loans for the purchase of properties in Mainland China increased from $70 million in March to $103 million in April. The amount of outstanding loans decreased by 0.65% to $7.2 billion.

Hong Kong Monetary Authority

26 May 1999

Notes to Annex
Annex