Business

New lending rules in HK drive optimism for apartment sales

HONG KONG Relaxed mortgage rules in Hong Kong that allow buyers to take on bigger loans will drive small-to-medium flat sales, property agents said, with the changes already prompting some sales.

Hong Kong's leader Carrie Lam on Wednesday expanded borrowers' power by reducing the size of down payments required for home purchases as part of a slew of measures aimed at alleviating the city's housing shortage.

Under the Mortgage Insurance Programme, borrowers can carry a loan-to-value ratio (LTV) as high as 90 per cent on properties worth up to HK$8 million (S$1.4 million).

Before, such a high ratio was only permitted on properties worth half as much.

Borrowers can get an LTV of 80 per cent on properties worth as much as HK$10 million, previously capped at HK$6 million.

This means prospective buyers will not need so much money up front.

For example, the down payment on an HK$8 million home will fall to HK$800,000 from HK$3.2 million.

"Last evening, our agents sold three apartments in Fanling (in the New Territories), which was a lot because there haven't been 3 transactions for a whole month," said Centaline Property Agency Asia Pacific residential chief executive Louis Chan.

He said the transactions ranged from HK$4 million to HK$6 million and the buyers hastened their decision after Mrs Lam's announcement.

The sellers also cut their price by 2 per cent to 3 per cent.

Previously, buyers were more likely to consider new homes, for which developers provided high LTV loans. - REUTERS

Property