The quota for the first quarter has been overdrafted. Large banks maintain normal business temporarily.
Banks become more prudent on lending due to the unclear outlook of the Hong Kong economy and property market. Industry insiders disclose, in only 15 days have passed since 2020, many small and medium-sized banks including the Bank of East Asia have suspended or slowed down their applications for residential housing mortgage in the first quarter for the reason that the quota for the first quarter has been overdrafted, while large banks remain normal for the time. The market source points out that, there are second-hand potential buyers who finally abandon the transaction because of over budget.
(By Leong Yuet Kam, Lai ChiTin)
The market source points out that, a buyer bought middle-rise room 01 of 446 sq ft in block C of Healthy Gardens in North Point for HKD8.5 million last month, and the property price is in line with the new mortgage insurance plan of borrowing 90% of the most in theory, while the potential buyer planned to borrow 60% of the property price and was about to sign the contract yesterday. However, BEA(Bank of East Asia) refused when the potential buyer asked it to undertake the mortgage, thus this potential buyer finally failed to reach a deal.
The property market is not clear, so the examination and approval is rather prudent
The sources also reveal that a few small and medium-sized banks had overdrafted the mortgage quota at the end of last year, and the overdrafted part was allocated to the first quarter of this year, so the quota in the first quarter was out so quickly. Recently, several small and medium-sized banks, including Bank of East Asia, have slowed down or suspended their mortgage applications in the first quarter such as mortgage insurance and submortgage, and it is believed to be mainly related to the overdraft of the quota of mortgage loans. According to the analysis, at present, Hong Kong economic outlook is not clear, coupled with the expected downward pressure on the property market, thus the attitude of banks to approve mortgages is generally prudent, and it is estimated that banks will not actively strive for mortgage business before the second quarter. Based on the market data, at present, P is based on the actual interest rate of 2.35% and H is based on the average interest rate of 2.5%.
Since the Government relaxed the upper limit of property prices under the mortgage insurance for the existing houses, recently, most of the buyers of many new projects have chosen the construction period payment instead of the immediate installment payment which was the main selection in the past, and the second-hand houses under ten million HKD can also apply for mortgage insurance, so it is believed that several small and medium-sized banks will suspend or slow down the residential mortgage application in the first quarter, which has little impact on the sales of the starter homes. While market participants believe it reflects that some banks are cautious about the prospect of the property market, and the pricing of the first and second-hand properties will need to be conservative to reach a deal.
The property price for one three-bedroom unit in Rambler Crest has fallen 11% in one month.
Owners of many second-hand houses need to continue to cut prices to reach a deal. Ip Kin-chung from Centaline Property expresses, some owners in Tsing Yi district accept the reality and increase the bargain range, for example, middle-rise room E in 690 sq ft and layout of three-bedroom one suite in block 1 of Rambler Crest, the owner of which put on sale it at the end of November last year for HKD8.8 million, and it was finally cut by HKD0.98 million or about 10% after more than one month to HKD7.88 million and sold, with the sq ft price at HKD11,420. In April 2007, the original owner purchased it for HKD2.645 million, making the book profit of nearly twice. Ip Kin-chung points out that the transaction of the same style house in the project was high-rise room E of 690 sq ft in block 3 being sold for HKD8.9 million last month, so the latest transaction price has fallen HKD1.02 million or 11% compared with the previous month.
Besides, Cheong Kin-yip of Centaline Property expresses, one owner of an even number house of 1,090 sq ft in Green Crest, Ngau Tam Mei, Yuen Long asked for about HKD12 million and cut buy HKD1.3 million to HKD10.7 million and sold, with the sq ft price at HKD9,817. In March 2012, the original owner bought the above unit for HKD7.55 million, taking book profit of 41.7% in about 8 years. Leong Wing-sun from Hong Kong Property Services also expresses, high-rise room F of 742 sq ft in block 7 of South Horizons, Ap Lei Chau was put on sale by the owner for HKD14.5 million, and it was cut by HKD1.3 million or 9% to HKD13.2 million and sold to a customer from another district after a few months, with the sq ft price at HKD17,790. The original owner purchased it for HKD5.85 million in June 2009, and it has appreciated 1.26 times.
