New mortgage lending rose in March, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in March increased by 8.2% to $10.8 billion compared with the decline of 5.2% in February. The average size of new loans decreased slightly to $1.43 million in March from $1.45 million in February.
New loans approved during the month grew markedly by 57.6% to $16.2 billion from $10.3 billion in February, largely driven by the upsurge in sale activity in the primary market. Refinancing loans increased in absolute terms after falling for two consecutive months, and accounted for 32.8% of new loans approved in March (46.5% in February). Loans approved during the month but not yet drawn rose by 60.1% to $12.2 billion in March from $7.6 billion in February.
The average loan-to-value ratio of new loans approved rose to 58.1% in March from 57.0% in February. The average contractual life increased to 205 months from 195 months. Of these loans, 99.6% were related to owner-occupied properties.
On the pricing front, loans granted at below the best lending rate for the whole term of the mortgage accounted for 65.1% of the new loans approved, up significantly from 29.5% in February.
The amount of outstanding mortgage loans remained flat in March. The annualised rate of growth of outstanding loans was 0.2% in the three months to March, down from 0.7% in February. The average change over the last twelve months fell to 2.8% from 3.2% in February.
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 1.16% in March from 1.17% in February.
"The ratio of mortgage loans granted at below the best lending rate rose significantly in March, reflecting that the mortgage price war among banks has become more acute." said Mr Y. K. Choi, Acting Deputy Chief Executive of the HKMA. "We will continue to discuss with individual institutions their risk management systems for monitoring the interest rate risk involved."
Gross loans made for the purchase of properties in Mainland China rose to $64 million in March from $15 million in February. The amount of outstanding loans decreased by $89 million to $6.24 billion.
Hong Kong Monetary Authority
27 April 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.
