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December residential mortgage survey results released
Residential mortgage loans for the purchase of properties in Hong Kong continued to grow rapidly in December 1996, according to the results of the latest monthly survey conducted by the Hong Kong Monetary Authority (HKMA).
In view of current market conditions, the HKMA has recommended that the maximum loan to value ratio for more expensive properties with a value of over $12 million should be reduced to 60%.
The latest figures show that the total amount of outstanding mortgage lending by the 33 institutions in the survey rose by 2.4% in December (1.8% in November) to $330.4 billion. (The percentage change has been adjusted to allow for the reclassification of loans by a number of institutions amounting to $2.9 billion during the month). The growth rate is higher than the monthly average of 1.6% over the last 12 months.
"The rapid growth in lending reflected the increased activity in both the primary and secondary residential property markets in November," said Deputy Chief Executive of HKMA, Mr David Carse.
The annualised rate of growth in lending over the last three months increased to 26.8% from 20.2% in the three-month period to November. The 12-month average of outstanding loans showed an annualised growth rate of 18.9%, compared with 17.6% in November.
The amount of new loans approved but not yet drawn dropped from the already high base in November by 8.4% to $12.7 billion in December.
"In view of the buoyancy of the residential property market and new flats offered to the market in early January, we expect the growth of residential mortgage loans will continue to rise quite rapidly in January," said Mr Carse.
"In the light of such factors as the acceleration of lending in recent months and the sharp rise in property prices, we believe that it would be sensible for institutions to reduce the loan to value ratio for the more expensive properties.
"Some banks have already done this and it would be prudent for it to become general practice."