New mortgage lending fell in May, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in May fell by 3.6% to $9.7 billion after falling by 6.4% in April. The average size of new loans increased to $1.43 million in May compared with $1.38 million in April.
However, new loans approved during the month rose by 2.0% to $13.3 billion compared with the decline of 19.6% in April, largely due to an increase in refinancing loans. Refinancing loans rose in absolute terms for the third consecutive month, and accounted for 50.7% of new loans approved in May (46.4% in April). In contrast, the primary market was very quiet as both developers and buyers adopted a wait-and-see attitude. Loans approved during the month but not yet drawn increased by 3.7% to $10.4 billion in May from $10 billion in April.
The average loan-to-value ratio of new loans approved edged down to 57.3% in May from 57.5% in April. The average contractual life decreased to 197 months from 199 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 82.9% of the new loans approved, up from 76.8% in April.
The amount of outstanding mortgage loans was flat in May. The annualised rate of growth of outstanding loans was 1.8% in the three months to May, up from 1.5% in April. The average change over the last twelve months was 1.6%, compared with 2.6% in April.
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 1.19% in May from 1.18% in April.
"The rising trend in the delinquency ratio, although mild, is worth close monitoring," said Mr. David Carse, Deputy Chief Executive of the HKMA. "The overall asset quality of the residential mortgage portfolio is still good but banks should remain prudent in their lending criteria amid keen competition."
Gross loans made for the purchase of properties in Mainland China increased sixfold to $107 million in May from $15 million in April. The amount of outstanding loans decreased by $43 million to $6.08 billion.
For further enquiries, please contact:
Jasmin Fung, Manager (Press), at 2878 8246 or
Alice Lo, Manager (Press), at 2878 1843
Hong Kong Monetary Authority
29 June 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.
