New mortgage lending continued to decline but new loans approved picked up in November, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in November decreased by 5% to $7.7 billion from $8.1 billion in October (compared with the 8.3% decline in October). The average size of new loans decreased to $1.34 million in November from $1.37 million in October.
New loans approved during the month increased by 34.8% to $13.1 billion ($9.7 billion in October). Refinancing loans continued to grow and accounted for 50.6% of new loans approved (40.2% in October). Loans approved during the month but not yet drawn increased by 48.8% from $7.2 billion in October to $10.7 billion in November.
The average loan-to-value ratio of new loans approved remained stable at around 57.0% (57.1% in October) and the average contractual life at 199 months (200 months in October). 99.7% of these loans were related to owner-occupied properties.
On the pricing front, 91.6% of the new loans were granted at the best lending rate (89.3% in October). Loans granted at below the best lending rate for the whole term of the mortgage amounted to 2.4% of the new loans approved (compared with 1.9% in October).
The amount of outstanding mortgage loans decreased by 0.12% in November, compared with a 0.13% rise in October. The annualised rate of growth of outstanding loans in the three months to November decreased to -0.7% from -0.2% in October. The average change over the last twelve months fell to 5.0% from 6.2% in October.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) rose slightly to 1.17% as at November 1999 (compared with 1.16% in October).
"Competition continued to intensify during November as indicated by the rise in the percentage of refinancing loans," said Mr. David Carse, Deputy Chief Executive of the HKMA. "However, sample checks recently conducted by the HKMA suggest that institutions are adhering to prudent lending criteria, including the 70% loan to value ratio, in respect of refinancing loans. Institutions should continue to adhere to this approach."
Gross loans for the purchase of properties in Mainland China increased from $31 million in October to $112 million in November. The amount of outstanding loans decreased by 1.0% to $6.51 billion.
Hong Kong Monetary Authority
29 December 1999
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 more than 3 months 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.
