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Hong Kong Monetary Authority Eases Mortgage Lending Restrictions to Revive Declining Property Market
Hong Kong's financial regulator has loosened limitations on mortgage lending in an effort to stimulate the market. The HKMA is now enabling purchasers to take out loans of up to 70% of a property's worth, aiming to rejuvenate a market that saw a 6.2% decrease in prices within the first eight months of the year.
Hong Kong has initiated measures to rejuvenate the city's real estate market by relaxing mortgage lending regulations to levels that were in place before 2009. This follows a policy adjustment in February that only resulted in a temporary surge.
The Hong Kong Monetary Authority (HKMA) has announced that effective immediately, homebuyers can now secure up to 70% financing, no matter the cost or purpose of the property. Furthermore, the debt-servicing ratio has been increased from 40% to 50%, uniformly applying to both residential and non-residential properties.
Residences with a value exceeding HK$30 million (equivalent to US$3.8 million) will now qualify for 70% mortgage financing, a significant increase from the previous 50% to 60%, according to the HKMA. The initiative was initially introduced by Chief Executive John Lee Ka-chiu in his policy speech.
The Chief Executive of HKMA, Eddie Yue Wai-man, stated that the modifications were implemented considering the present state of the real estate market. This adjustment implies that the mortgage guidelines have been reverted to their pre-2009 state, a period when the cost of borrowing reached unprecedented lows following the worldwide economic crisis.
"Despite the changes declared today, the Hong Kong banking sector is sufficiently equipped to deal with any issues that may arise from a sudden drop in property prices," said Yue in the statement.
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