Mortgage loan ratios adjusted

July 7, 2023

Monetary Authority Chief Executive Eddie Yue:

The Hong Kong Monetary Authority has decided to make several adjustments to the countercyclical macroprudential measures for property mortgage loans, while continuing to maintain banking stability and ensuring the proper risk management of property mortgage loans.

These adjustments include first, to adjust the maximum loan-to-value (LTV) ratio for self-occupied residential properties, the maximum loan-to-value ratio for residential properties with a value of $15 million or below will be increased to 70%. For properties valued at more than $15 million and up to $30 million, the maximum loan-to-value ratio will be increased to 60%. For residential properties with a value above $30 million, the maximum loan-to-value ratio will remain unchanged at 50%.  

And to avoid a sudden drop in applicable LTV ratios, the ratios for properties in certain value ranges will change gradually. The maximum loan-to-value ratio for non-self-use residential properties will remain unchanged at 50%.

The second adjustment is to increase the maximum loan-to-value ratio for non-residential properties from 50% to 60%.

And the third adjustment is to increase the maximum loan-to-value ratio for property mortgage loans assessed based on the net worth of borrowers from 40% to 50%. This adjustment is applicable to both residential and non-residential properties.

Since these adjustments are a relaxation of countercyclical macroprudential measures, they can take effect from today and will apply to property transactions with provisional sale and purchase agreements signed today or subsequently.

The Monetary Authority today issued guidelines to banks regarding adjustments to the countercyclical macroprudential measures for mortgage loans.

In a meeting with media today, Monetary Authority Chief Executive Eddie Yue said there was room to make the adjustments while continuing to maintain banking stability and ensure proper risk management in relation to mortgage loans.

The adjustments include, firstly, changes to maximum loan-to-value (LTV) ratios for self-occupied residential properties. For properties with a value of $15 million or less, the maximum LTV ratio will be raised to 70%. For properties with a value of more $15 million and up to $30 million, the maximum ratio will be increased to 60%. For those with a value above $30 million, meanwhile, it will remain unchanged at 50%.

To avoid a sudden drop in applicable LTV ratios, the ratios for properties in certain value ranges will change gradually. The maximum LTV ratio for non-self-use residential properties will remain unchanged at 50%.

The second adjustment increases the maximum LTV ratio for non-residential properties from 50% to 60%, while the third increases the maximum LTV ratio for mortgage loans assessed on the basis of borrowers’ net worth from 40% to 50%. This adjustment is applicable to both residential and non-residential properties.

The adjustments take effect immediately, and apply to property transactions with provisional sale and purchase agreements signed today or subsequently.

Mr Yue said this was the first time the authority had relaxed the countercyclical macroprudential measures for residential properties since they were implemented in 2009.

Noting that people would now be able to take out property mortgage loans at higher LTV ratios, he reminded prospective buyers to carefully assess their own ability to afford a property and prudently manage the financial risks involved.

Also today, HKMC Insurance announced amendments to its Mortgage Insurance Programme for completed residential properties in order to provide assistance to homebuyers.