Residential Mortgage Survey Results for July 1999

New mortgage lending declined in July reflecting more subdued market activities, according to the HKMA's monthly survey of residential mortgage lending.

The amount of gross new loans made in July decreased by 13.5% to $12.2 billion from $14.1 billion in June (compared with the 2.4% rise in June). The average size of new loans decreased to $1.49 million in July from $1.58 million in June.

New loans approved during the month decreased by 32.6% to $10.5 billion ($15.6 billion in June). Loans approved during the month but not yet drawn also fell by 34.2% from $11.7 billion in June to $ 7.7 billion in July.

The average loan-to-value ratio of new loans approved was 56.49% (57.35 in June) and the average contractual life was 201 months (the same as in June). 99.5% of these loans were related to owner-occupied properties.

Reflecting the slower pace of growth in new mortgage lending, the amount of outstanding mortgage loans increased by 0.3% in July, compared with the 0.8% growth in June. The annualised rate of growth of outstanding loans in the three months to July decreased to 9.1% from 10.1% in June. The average change over the last twelve months fell to 7.7% from 8.2% in June.

The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) declined slightly to 1.13% as at July 1999 (compared with 1.14% in June).

On the pricing front, 82.5% of the new loans were granted at the best lending rate (compared with 87.2% in June).

"The decline in the loan delinquency ratio for the second successive month provides further indication that the quality of the mortgage portfolio has stabilised and may be improving," said Mr. David Carse, Deputy Chief Executive of the HKMA. "However, banks should ensure that they do not relax their credit standards amid the current fierce competition for new business."

Gross loans for the purchase of properties in Mainland China decreased from $62 million in June to $46 million in July. The amount of outstanding loans decreased by 2.4% to $6.84 billion.

Hong Kong Monetary Authority

31 August 1999

Attachment:

Notes to Annex

Annex