11,000 cases of interest-only loans have approved to enterprises, involving more than HKD86 billion.
All industries are depressed under the epidemic. Regulators take the lead to encourage banks to make good use of credit space and provide timely rain for enterprises and individual customers. Interest-only loans have used in housing mortgages for enterprises and personal customers. The President of Hong Kong Monetary Authority, Jyu Wai-Man disclosed yesterday that they are researching to extend the interest-only loan to mortgages for subsidized housing to relieve more public housing pressure. The research is nearing completion and estimated to be announced shortly. Jyu Wai-Man said they would, at the same time, launch many "epidemic" cycle measures including postponing bank stress tests until next year to ensure banks can focus on bailout measures.
Journalist Ma Chui-Mei
The industry believes that Hong Kong Monetary Authority planning to extend the Interest Only Loan to subsidized housing can help the public, especially the grassroots users, more comprehensively. BOC Hong Kong (2388) said yesterday that it is actively negotiating with the relevant agencies on the postponement of public housing mortgage principal to provide appropriate support to more customers in need. The bank would announce in due course if there are new measures.
Industry: The measure can help public housing more fully.
According to data from the Centaline Mortgage Research Department and the Land Registry, self-owned homes mortgages with subsidy last year were 16,288 cases, accounting for 16.5% of mortgage registrations for existing houses throughout the year. Wong Mei-Fung, the Managing Director of Centaline Mortgage, believes that Interest Only Loan extending to subsidized housing mortgage will reduce the pressure of the relevant people in need on a mortgage payment since the subsidized housing mortgages account a certain market ratio. Also, the measure can extend to a broader range to help the public more comprehensive. Cho Tak-Ming, the Chief Vice President of mReferral Mortgage Brokerage Services, expresses that most grassroots employees in all walks of life are affected by the epidemic. And the main targets of subsidized housing are grassroots employees who buy their first house. As a result, the measure is positive and has certainly help to stabilize the property market.
Jyu Wai-Man wrote on the "inSight" column yesterday that the HKMA has supported the banking system in the past few months. It enables the banking system to play financial integration more smoothly, support the substantial economy, and ease the financial stress of affected companies and citizens pressure. Several measures include the banking SME loan coordination mechanism under the convening by HKMA last year. HKMA had taken the initiative to clarify the regulatory requirements related to restructuring loans on the meetings with banks. The banking has earlier launched four rounds of measures aimed at relieving cash flow pressure on customers.
The Interest Only Loan for individuals has been 5200 cases involving HKD15 billion.
According to the data of the HKMA, as of April 21, 16 banks that active in SME loans have approved more than 11,000 applications of interest-only loans, loan extension, and emergency loans for corporates, involving more than HKD86 billion. The bank has also approved more than 5,200 applications, including residential interest-only loans, emergency loans, etc., for individual customers, involving more than HKD15 billion. A mortgage corporation under the HKMA launches a 100% guaranteed preferential loan, application of which started to be collected on Monday. The bank received a total of about 300 applications on the first day. About 30 were submitted to the mortgage corporation after a quick review. And there were 10 cases had approved on the same day.
Jyu Wai-Man also points out that the HKMA has prepared in the past few years and built a healthy buffer for the banking system. The current economic reversal is just the right time to release the buffer in an appropriate amount, giving banks more room and the ability to continue to provide credit to support the real economy. The acts include reduction of countercyclical capital buffers twice by a total of 1.5%, releasing a loan space equivalent to HKD700-800 billion, and clarification of regulatory liquidity requirements, making banks can temporarily deviate from the legal minimum liquidity ratio when necessary.
Bank stress test postpones to next year.
HKMA has also made some flexible changes to some regulatory requirements to ensure that banks can focus on bail-out measures. The changes include the following aspects. First is a year delay in implementation of various requirements of regulatory capital structure in "Basel III," according to the Basel committee. Second is the flexible handling of regulatory statements and other reports regularly submitted by banks. The third is an extension of banks' stress tests this year until next year to make banks can allocate sufficient resources to focus on the current urgent challenges. He stresses to continue paying close attention to the impact of the epidemic situation, maintains close communication with the industry, and launch other "epidemic cycle" measures in due course in the future.
