TNAG-0912-FCO40-1122-Policy-on-housing-and-resettlement-in-Hong-Kong-1979 — Page 147

CONFIDENTIAL # #

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XCC(77)8

Range of Maximum

Debt Servicing under Proposed

Mortgage Terms

9

Initial Programme:

Phase I Flats

$

$1,800

Average

p. m.

($2,650 p.m.

m.)

$3,500

p. m.

Project

Estimated Average Cost

193

8%

75,000

111,000

82% 73,000

108,000

146,000 142, 000

Lai Chi Kok

85,500

Chai Wan

98,000

9% 71,000

104, 000

138,000

Aberdeen

112,000

Shatin

113, 400

Oi Man

142,000

Proposed Mortgage Facilities

19

Possible Forms of Mortgage Facilities. The mortgage facilities required to underpin the Home Ownership Scheme can take many and varied forms.

20

At one end of the spectrum is a scheme whereby lending institu- tions would provide loans directly to flat purchasers who qualify for assistance, on terms specified by the Government, but without any further Government involvement (e. g. the provision of default guarantees). It is necessary under these arrangements for the Government to specify the terms of the mortgage, so as to ensure that they are consistent with the income and other guidelines of the Home Ownership Scheme, and so as to provide a reasonable degree of protection for both the Government's and the mortgagor's asset. These arrangements should be considered where the Government is satisfied that lending institutions are willing to provide loans on this basis and that adequate funds would be forthcoming.

21

At the other end of the spectrum is a scheme whereby the Govern- ment would create a non-profit-making mortgage institution to raise funds for the express purpose of on-lending them to flat purchasers who qualify for assistance towards becoming home owners. Precisely how it would raise and manage funds, and the type of funds involved, would depend on demand and market conditions. These arrangements would suit circum- stances where either lending institutions are not prepared to provide the mortgage facilities described in the previous paragraph or the funds lending institutions provide are not sufficient to meet the demand for loans.

C.S. 166

CONFIDENTIAL

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