The Hong Kong Monetary Authority (HKMA) issued today (Friday) guidelines to banks on a new round of supervisory measures on property mortgage to strengthen banks’ risk management and resilience. The measures are as follows:
First: The maximum loan-to-value (LTV) ratio for self-use residential properties with value below HK$7 million will be lowered by a maximum of 10 percentage points. For example, the maximum LTV ratio applicable to properties with value at HK$6 million or below and subject to the LTV cap of 70% will be lowered to 60%.
Second: The maximum debt-servicing ratio (DSR) for borrowers who buy a second residential property for self-use will be lowered to 40% from 50%, and the stressed-DSR cap will be lowered to 50% from 60%.
Third: The maximum DSR of mortgage loans for all non-self use properties, including residential properties, commercial and industrial properties and car park spaces, will be lowered to 40% from 50%, and the stressed-DSR cap will be lowered to 50% from 60%.
The above three countercyclical measures take immediate effect. However, mortgage applications for properties with provisional sale and purchase agreements signed today or earlier will not be affected.
Hong Kong Monetary Authority
27 February 2015