New mortgage activity revived somewhat in January, according to the HKMA's monthly survey of residential mortgage lending.
After falling for the previous two months, new loans approved rose by 14.5% to HK$6.6 billion, driven by growth in approvals for transactions in the primary market. While the share of the total new loans approved accounted for by transactions in the primary market expanded to 29.4% from 17.3% in December, refinancing loans fell to 30.3% from 35.4%. Loans approved during the month but not yet drawn increased by 25.2% to HK$4.9 billion from HK$3.9 billion in December.
Reflecting the previous declines in loan approvals, the amount of gross new loans actually advanced in January fell by 14.6% to HK$5.1 billion. The average size of new loans increased to HK$1.31 million from HK$1.29 million in December.
The average loan-to-value ratio of new loans approved increased to 60.9% from 59.6% in December. The average contractual life lengthened to 204 months from 201 months. 99.1% of loans were related to owner-occupied properties.
On the pricing front, loans granted at below the best lending rate for the whole mortgage term accounted for 87.4% of new loans approved in January, compared with 87.1% in December. Loans granted at more than 2% below the best lending rate represented 66.6% of new loans approved, up from 62.8% in December. Loans advanced at more than 2.25% below the best lending rate also increased to 19.0% of new loans approved, compared with 7.4% in December.
The amount of outstanding mortgage loans fell by another 0.4% in January. The 12-month growth rate further decreased to 0.4% from 0.8% in December.
The loan delinquency ratio (measured by the ratio of mortgage loans overdue for more than 3 months to total outstanding mortgage loans) increased to 1.30% from 1.26% in December.
"There are indications that a new pricing level for mortgages is beginning to be established at more than 2.25% below best lending rate," said Mr David Carse, Deputy Chief Executive of the HKMA. "This increases the need for lending institutions to consider carefully the basis risk to which they may be exposed if the prime-HIBOR spread were to narrow."
Gross loans made for the purchase of properties in Mainland China decreased to HK$43 million from HK$51 million in December. The amount of outstanding loans decreased further by HK$88 million to HK$5.9 billion in January.
For further enquiries, please contact:
Jasmin Fung, Manager (Press), at 2878 8246 or
Caitlin Wong, Manager (Press), at 2878 1687
Hong Kong Monetary Authority
27 February 2001
Annex
Notes to Annex
- The Residential Mortgage Survey is a continuous monthly survey that covered 32 authorized institutions in the banking industry.
- Residential mortgage loans in this survey are loans (include refinancing loans) to private individuals for purchase of residential properties, including uncompleted units, but other than those properties under the Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme.
- Gross new loans made are new mortgage loans drawn down during the surveyed month.
- New loans approved are mortgage loans approved during the surveyed month. The loans can either be drawn down in the same month or in the following months. Loans that are approved but not yet be drawn, which have implications for the amount of gross new loans made in the following months, are shown under the item "New loans approved during month but not yet drawn".
- Delinquency ratio is measured by a ratio of total amount of overdue loans to total outstanding loans.
- Co-financing schemes refer to those schemes that involve provision of top-up finance by property developer(s) or other co-financier(s) in addition to mortgage loans advanced by authorized institutions. For loans associated with co-financing schemes, only the portion of loans advanced by authorized institutions are included in this survey.
- Average loan-to-value ratio and average contractual life are average figures weighted by the amount of new loans approved during the surveyed month by individual authorized institutions.
