ENG-2006 — Page 122

94 | Financial and Monetary Affairs

Mortgage Insurance Programme

The Mortgage Insurance Programme (MIP) was launched in 1999 to provide mortgage insurance cover to banks so that they can extend residential mortgage loans to homebuyers and above the 70 per cent loan-to-value ceiling set by the HKMA. The maximum insurance cover is up to 25 per cent of the value of the mortgaged property.

The MIP has gained wide acceptance and promoted home ownership through product diversification and improvements to servicing standards. As at the end of 2006, over 80 000 applications have been received involving an aggregate mortgage loan amount of $154 billion, out of which a total of $119 billion in mortgage loans were approved. The market penetration rate of approved loans was 13.5 per cent in 2006. About 86 per cent of MIP loans drawn down in 2006 are for secondary market properties, demonstrating that the MIP is particularly instrumental in promoting the liquidity of the secondary market.

Mortgage-backed Securities Market

The HKMC established a back-to-back mortgage-backed securities (MBS) programme in October 1999, which provides a platform for banks to effectively repackage their mortgage portfolios into more liquid MBS. The HKMC guarantees the timely payment of interest and repayment of principal for the securitised mortgage loans. Since the inception of the back-to-back MBS programme, $2.8 billion of MBS have been issued.

In December 2001, to further develop the range of products available in Hong Kong's MBS market, the HKMC established the multi-currency Bauhinia MBS Programme with MBS collateralised by mortgage loans from the HKMC's retained mortgage portfolio. A total of $10.4 billion of MBS have been issued under the Bauhinia MBS Programme by the end of the year, including the first un-guaranteed AAA-rated MBS in Hong Kong in November 2006.

Companies Registry

The Companies Registry administers and enforces the major part of the CO. The registry incorporates local companies, registers overseas companies, deregisters defunct solvent private companies, registers documents required to be submitted by registered companies and provides the public with services and facilities to inspect and obtain company information kept by the registry. It also administers and enforces several other ordinances including the Trustee Ordinance (insofar as it relates to trust companies), the Registered Trustees Incorporation Ordinance and the Limited Partnerships Ordinance. The registry is also responsible for a wide range of legal, policy and regulatory matters related to the ordinances and corporate governance.

The Companies Registry has operated as a trading fund department since 1993. Consequently, it can keep part of its income and deploy it more flexibly to meet its own needs, business turnover and customers' demands and expectations. The department achieved a surplus of $114.1 million in the 2005-06 financial year. The surplus generated over the past years has enabled the registry to build up a healthy