New mortgage lending and new loans approved rose moderately in October, according to the HKMA's monthly survey of residential mortgage lending. However, the rise was due to a special factor relating to the reallocation of a mortgage portfolio between authorised institutions. Underlying growth remained sluggish.
The amount of gross new loans made in October increased by 4.2% to HK$8.9 billion after declining by 25.3% in September. The average size of new loans increased to HK$1.39 million from HK$1.35 million in September.
New loans approved during the month rose by 9.1% to HK$11 billion compared with a decline of 5.8% in September, largely driven by growth in approvals for transactions in the primary market and refinancing loans. After falling for four consecutive months, the share of the total new loans approved accounted for by refinancing loans rose to 29.6% from 25.7% in September. The increase in refinancing loans was mainly related to the reallocation of a mortgage portfolio mentioned above. Loans approved during the month but not yet drawn increased by 1.0% to HK$7.6 billion from HK$7.5 billion in September.
The average loan-to-value ratio of new loans approved increased to 61.4% from 59.1% in September. The average contractual life lengthened to 207 months from 204 months in September. 99.3% of loans 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 90.8% of new loans approved, compared with 89.2% in September. Loans granted at more than 2% below the best lending rate represented 64.6% of new loans approved.
The amount of outstanding mortgage loans edged up by 0.1% in October. The 3-month moving average growth rate (annualised) of outstanding loans increased to 1.9% from 1.2% in the 3 months to September.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) increased to 1.31% in October from 1.28% in September.
"Based on the latest data, about two thirds of new mortgage loans are now being granted at more than 2% below the best lending rate," said Mr. David Carse, Deputy Chief Executive of the HKMA. "While the easing in funding costs has helped to reduce the impact on lending margins, banks should assess carefully the implications for their profitability should funding costs rise. Moreover, the loan delinquency ratio continues to creep up. This also needs to be kept in view."
Gross loans made for the purchase of properties in Mainland China increased to HK$79 million from HK$23 million in September. The amount of outstanding loans decreased by HK$77 million to HK$6.1 billion in October.
For further enquiries, please contact:
Jasmin Fung, Manager (Press), at 2878 8246 or
Caitlin Wong, Manager (Press), at 2878 1687
Hong Kong Monetary Authority
28 November 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
