New mortgage lending fell in April, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in April fell by 6.4% to $10.1 billion compared with the increase of 8.2% in March. The average size of new loans decreased to $1.38 million in April from $1.43 million in March.
New loans approved during the month dropped markedly by 19.6% to $13 billion from $16.2 billion in March, largely due to the slowdown in sale activity in the primary market. Refinancing loans increased in absolute terms for the second month, and accounted for 46.4% of new loans approved in April (32.8% in March). Loans approved during the month but not yet drawn fell by 17.9% to $10 billion in April from $12.2 billion in March.
The average loan-to-value ratio of new loans approved fell to 57.5% in April from 58.1% in March. The average contractual life decreased to 199 months from 205 months. Of these loans, 99.2% 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 76.8% of the new loans approved, up from 65.1% in March.
The amount of outstanding mortgage loans grew slightly in April. The annualised rate of growth of outstanding loans was 1.5% in the three months to April, up from 0.2% in March. The average change over the last twelve months fell to 2.6% from 2.8% 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 1.18% in April from 1.16% in March.
"The extent of the competition for new mortgage business is illustrated by the fact that over 55% of mortgage loans approved during the month were priced at more than 1.5% below the best lending rate," said Mr. David Carse, Deputy Chief Executive of the HKMA. "So far, relatively low funding costs have helped to compensate for the squeeze on lending margins, but it cannot be assumed that this situation will persist."
Gross loans made for the purchase of properties in Mainland China decreased to $15 million in April from $64 million in March. The amount of outstanding loans decreased by $119 million to $6.13 billion.
For further enquiries, please contact:
Thomas Chan, Senior Manager (Press) at 2878 1480 or
Caitlin Wong, Manager (Press) at 2878 1687
Hong Kong Monetary Authority
30 May 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.
