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The annualised rate of growth in lending over the last three months increased to 20.1% from 14.7% in the three-month period to October. The twelve-month average of outstanding loans showed an annualised growth rate of 17.6%, compared with 17% in October.
"The increase in lending in November follows the sharp upward movement in October. Prior to then the growth in lending had been on a declining trend for some months. At the same time, property prices, particularly those at the upper end of the market, have risen sharply in recent weeks and there are signs of renewed speculative activity.
"In this environment, institutions need to exercise additional care in relation to their property exposure. They should look critically at their lending criteria. particularly in relation to the more expensive properties where the speculation has been most evident.
"As an overall policy, institutions should adhere strictly to the 70% loan to value ratio in respect of their own lending exposure and should avoid arrangements which circumvent this ratio.
"A lower ratio than 70% will normally be appropriate for more expensive properties, and the valuation of such properties should be carefully examined.
"Institutions should also have regard to the debt-servicing ratio of the borrower and whether the property in question is to be owner-occupied or is being acquired for investment purposes. The HKMA will continue to monitor the situation closely," said Mr Li.
The amount of new loans approved but not yet drawn further increased over the already high base by $2.3 billion (20.2%) to $13.8 billion in November. "These figures, coupled with the increased activity in both the primary and secondary markets in November, suggest that residential mortgage loans are likely to continue to grow at a rapid rate in December," said Mr Li.
The amount of residential mortgage loans associated with co-financing schemes accounted for 3.8% of total mortgage lending of the 33 surveyed institutions at end- November. Of the $20.8 billion new loans approved during November, about 83.5% were accounted for by properties aged 15 years or below.
Lending for the purchase of properties in China increased by 1.1% to $6 billion in November, Gross loans made in November decreased both in number (to 178 from 348) and in amount (to $161 million from $216 million). New loans approved in November also decreased both in number (to 246 from 319) and in amount (to $273 million from $286 million).
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