New mortgage lending fell in July, according to the HKMA's monthly survey of residential mortgage lending.
The amount of gross new loans made in July dropped by 0.3% to $10.0 billion after rising by 3.8% in June. The average size of new loans fell to $1.35 million in July from $1.43 million in June.
However, new loans approved during the month rose by 6.1% to HK$13.1 billion compared with the drop of 7.1% in June, largely driven by a pick-up in loan approvals in the primary market. Refinancing loans fell in absolute terms for the second consecutive month, and accounted for 30.5% of new loans approved in July, a marked decline from the ratio of 50.7% in June. Loans approved during the month but not yet drawn increased by 5.3% to $10.4 billion in July from $9.8 billion in June.
The average loan-to-value ratio of new loans approved rose to 58.9% in July from 57.3% in June. The average contractual life extended to 206 months from 198 months in June. Of these loans, 99.4% 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 88.4% of the new loans approved, down slightly from 89.0% in June.
The amount of outstanding mortgage loans edged down by 0.1% in July. The 3-month moving average growth rate (annualised) of outstanding loans as of July turned into a drop of 0.5%, compared to a growth of 1.3% in June, whereas the 12-month moving average lowered to 0.3% from 0.7% in June.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) increased to 1.27% in July from 1.23% in June.
"Keen competition for new mortgage business persisted, as evidenced by some banks offering mortgage rates at a new low of prime minus 2.25% recently," said Mr. Y. K. Choi, Acting Deputy Chief Executive of the HKMA. "Banks should ensure that they have carefully considered the funding costs and implications for their profitability."
Gross loans made for the purchase of properties in Mainland China fell by 18.7% to $167 million in July from $206 million in June. The amount of outstanding loans decreased by $18 million to $6.12 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
29 August 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.
