(by Ma Chui-mei)
The Government relaxed the threshold for mortgage insurance measures. The Chief Executive of the Hong Kong Monetary Authority (HKMA), Jyu Wai-man expressed yesterday that the original intention of the measure was to assist people who have repayment ability but no enough down payment in the first housing. But he stressed that house purchasing is an important financial decision and appealed buyers to evaluate future property market trends and interest rates. He also reminded those who wish to enter the market to consider whether they can afford the risks and their views on the property market since the property prices are affected by a number of factors.
Buyers have more choices after the mortgage insurance was relaxed.
Jyu Wai-man pointed out that, it has been noted that the property price upper limit for high percentage mortgage before the mortgage insurance was relaxed is unable to meet the needs of some home buyers, making these citizens turn to buy tiny houses or make additional loans, at the same time suppressing the trading in the second-hand property market, so the authority had continued to observe whether the insurance measure can be adjusted, while it was difficult to find an appropriate time to launch at that time, until recently, the property prices have fallen by 4% and the property market has been cooled down, thus it is believed a good time to introduce new mortgage insurance measure to offer more choices for home buyers.
As for the future direction of the property market, Jyu Wai-man pointed out that the property prices had fallen by 4% from high in May to September according to RVD data, and Centaline Property data also reflected that the property prices have fallen by nearly 6% from high in June to the present, also the transactions have fallen. However, he pointed out that the second-hand property transactions have been active in the past few weeks, so it is believed needs more data to confirm the property market trend.
The industry has clearly understood the requirements of the new measure.
There had banks pointed out that the new measure was not clear enough and caused the relative mortgage approving to be stopped in the initial stage of the new mortgage insurance measure. The Vice President of the HKMA, Yuen Kwok-hang admitted yesterday that there had banks raise questions especially about the stress test in the first two or three days after the new measure was launched, and under the new measure banks were not clear whether to make the stress test when borrowing 60% mortgage excluding the mortgage insurance plan, while the HKMA has clarified the relevant requirements, including that buyers should meet the basic repayment requirement of Debt Servicing Ratio in 50% whether they can pass the stress test and etc., also the banking industry has clearly understood the relative requirements.
