TNAG-0912-FCO40-1122-Policy-on-housing-and-resettlement-in-Hong-Kong-1979 — Page 145

C.S. 166

CONFIDENTIAL 機密

14

7

XCC(77)8

Turning now to the second method of assistance referred to in paragraph 11 above, the Working Farty has had to devise basic parameters for mortgage arrangements that would suit the financial circumstances of households earning between $1, 800 and $3,500 a month. In so doing the Working Party has considered three basic questions:

(a) what percentage of their monthly income would it be

reasonable for such households to spend to meet debt repayments;

(b) whether their debt repayment expenditure would

secure for them reasonably attractive flats, were they to effect purchases on the basis of open market mortgage facilities; and

(c) having regard to (a) and (b), whether it is necessary

to devise a scheme of mortgage facilities which would offer terms better than those available on the open market and, if so, what these terms should be.

15

As regards paragraph 14(a): the proportion of its income a household should contribute towards the debt repayments involved in acquiring a flat is largely a matter of subjective judgement. Guidelines used for fixing rent in respect of low cost housing are not entirely re- levant because the expenditure involved results in the acquisition of an asset, while guidelines used elsewhere in respect of home ownership promotion schemes have little bearing on local conditions. Having regard:

(a) to a known tendency on part of households to under-

state incomes (the Census and Statistics Department believes that reported incomes tend to be under- stated by about 30%); and

(b) to the low incidence of default (for example, the

Building and Loan Agency had only three cases of foreclosure in 12 years and only a 2% rate in irregular monthly payments),

the Working Party concluded that it would be not unreasonable for house- holds to spend up to 40% of their income on mortgage repayments. In any event, it should be noted that 40% is to be regarded as a ceiling. Many purchasing households would not have to go to this limit, particu- larly as they will have a choice of buying a less expensive flat or making a larger downpayment than the minimum required. A lower than 40% ceiling will also have the disadvantage of excluding from the Home Ownership Scheme those households at the lower end of the recommended income range.

CONFIDENTIAL

機密