The recovery in new mortgage lending slowed in January, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in January was flat at $10.5 billion compared with a 36.1% advance in December. The average size of new loans decreased to $1.41 million in January from $1.45 million in December.
New loans approved during the month decreased by 9.0% to $13.1 billion from $14.4 billion in December. Refinancing loans fell in absolute terms for the first time since August 1999, but still accounted for 52.6% of new loans approved (51.1% in December). Loans approved during the month but not yet drawn decreased by 6.3% to $10.1 billion in January from $10.8 billion in December.
The average loan-to-value ratio of new loans approved decreased slightly to 57.0% from 57.6% in December. The average contractual life decreased to 187 months from 194 months. Of these loans, 99.3% were related to owner-occupied properties.
On the pricing front, 75.3% of the new loans were granted at the best lending rate, down from 85.3% in December. Loans granted at below the best lending rate for the whole term of the mortgage rose to 20.4% of the new loans approved, up from 10.5% in December.
The amount of outstanding mortgage loans was flat in January, compared with a rise of 0.21% in December. The annualised rate of growth of outstanding loans rose by 0.4% in the three months to January, compared with flat growth in December. The average change over the last twelve months fell to 3.6% from 4.0% in December.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than three months to total outstanding mortgage loans) rose to 1.16% in January from 1.13% in December.
"The mortgage war has continued to intensify and has reached the point in some cases where the margin barely covers funding costs in the initial year of the loan. The HKMA considers that this is an unhealthy development." said Mr. David Carse, Deputy Chief Executive of the HKMA.
Gross loans made for the purchase of properties in Mainland China increased to $167 million in January from $163 million in December. The amount of outstanding loans increased by $7 million to $6.49 billion.
Hong Kong Monetary Authority
28 February 2000
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.
