Pneumonia epidemic panic speeds the property market downturn. There is a mortgage insurance company refusing the mortgage application for the house above HKD6 million.
Hong Kong's economy is in recession hit by the Sino-US trade war and violent incidents. In the fourth quarter of last year, property prices fell by 2% to 3%, and the property prices of some individual houses fell 10% from the high level. So negative asset cases using high-percentage mortgage doubled to 128 quarterly in the fourth quarter last year. Currently, the pneumonia epidemic situation is spreading, and it is reported that a mortgage insurance company stopping to approve the mortgage application for houses above HKD6 million, reflecting that the property price risk is quite high. Market insider estimates that property prices will fall by another 3% to 5% in the first quarter of this year. Negative asset cases may double, and go higher than that in the fourth quarter of 2018 of 262 cases.
(By Leong Yuet Kam)
At the beginning of 2020, although China and the United States reached the first phase of the trade agreement which has played a positive role in the economy, current new coronavirus pneumonia epidemic situation brings about a significant concern in Hong Kong and the global economy, Cho Tak-ming, the Senior Vice President of mReferral Mortgage Brokerage Services, expresses. It is expected that property prices in Hong Kong will fall in the first quarter, and negative asset cases will continue to rise, likely breaking through 262 cases that appeared in the fourth quarter of 2018. People interested in house purchasing should also act according to their capability.
He suggests owners who intend to use the high-mortgage mortgage plan or second mortgage provided by the developers to carefully consider and calculate the personal burden and repayment ability. Once the property market reverses, such owners will be more likely to have negative assets.
The number of negative assets will rise in the first quarter.
Wong Mei-fung, the Managing Director of Centaline Mortgage, believes the number of negative assets will inevitably rise in the first quarter if the epidemic continues, and property prices fall further. She says, most of the customers took the mortgage loans at the end of last to this year after the new mortgage modification in October last year, and buyers choosing newly mortgage of 90% will have negative assets if property prices continue to fall another 10% this year. Wong Mei-fung believes the epidemic will have a greater impact on the property transactions in the first quarter, and property prices might fall by about 2%-3% on average this year; also property market would likely rebound after the epidemic improves. She points out that the number of negative assets in the first quarter is still at a very low level, although it is likely to continue to increase.
Homebuyers must reserve sufficient down payment.
Besides, it was reported in the market yesterday that QBE Mortgage Insurance Limited has reduced the property price upper limit of high percentage mortgage provided for cooperative banks to HKD6 million. Cho Tak-ming expresses, there are still mortgage companies providing high-percentage mortgages for houses under HKD10 million, and the above incident may caused by the recent weakening of the property market and the decline transactions. The approval for high percentage mortgage has always cautious, but banks may tighten the evaluation by 5% to 10%, so the applicants should reserve sufficient down payment, he says.
Cho Tak-ming adds that eligible customers also can successfully obtain the approval for mortgage loans if they have sufficient income proof, tax bills, good credit, and MPF records. It is expected that the mortgage company will still actively process high percentage mortgage applications in the future, so the impact on buyers using high percentage mortgages is little.
According to data, in mid-October last year, the government relaxed the property price upper limit of mortgage insurance for the first housing buyers and the mortgage insurance company of the mortgage company launched a high percentage mortgage insurance plan to provide banks with high percentage mortgage insurance. QBE Mortgage Insurance Limited also subsequently tried to develop similar types of mortgage insurance plans. After a period of trial, this insurance company suspended the approval of mortgage insurance plans for houses above HKD6 million at the beginning of this month due to current market conditions and risk assessments.
