Property Mortgage Lending

Press Releases

23 Sep 2022

Property Mortgage Lending

The Hong Kong Monetary Authority (HKMA) today (23 September) issued a circular to banks, lowering the interest rate stress testing requirement for property mortgage lending from the existing 300 basis points to 200 basis points.  The adjustment takes effect immediately, and applies to mortgage loans for all types of properties.

The purpose of the stress test is to ensure a mortgage borrower has adequate financial ability to cope with the repayment pressure when the mortgage rate increases, so that the risk of banks’ property lending business can be properly managed.  In determining the stress testing level, the HKMA will take into consideration the prevailing interest rate environment, the trend of mortgage rates and their long-term historical average.  The Federal Reserve of the United States has raised the federal funds target range by a total of 300 basis points since March this year.  In response to rising funding costs, banks have earlier raised their interest rate caps for new mortgages referencing the Hong Kong Interbank Offered Rate (HIBOR) and more recently their prime lending rates.  In view of these developments, the HKMA considers it appropriate to lower the stress testing assumption from the existing 300 basis points rise in the mortgage rate to 200 basis points.  This level is considered to be sufficiently prudent from the perspective of effective risk management of the banks’ property lending business.

Even though the stress testing requirement of the HKMA is lowered, members of the public should note that mortgage rates may increase amid the current interest rate environment.  They should carefully assess the interest rate and other financial risks involved before making property purchase, investment and financing decisions.


The Hong Kong Monetary Authority
23 September 2022

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Last revision date : 23 September 2022