Mortgage loan cap increase up to $12m is favourable: experts

Three industry leaders weighed in on the Mortgage Insurance Programme amendments.

The Hong Kong Mortgage Corporation (HKMC) Insurance announced amendments to the Mortgage Insurance Programme on 23 February. Notable amendments included the increase of the maximum property value eligible to $10m for mortgage loans up to 90% loan-to-value (LTV) ratio and $12m for mortgage loans up to 80%.

CBRE Head of Research Marcos Chan pointed out that the new amendments are only likely to see stronger stimulation to the residential market in the second half of the year due to the current challenging economy, potentially rebounding unemployment rate and tight social distancing measures which make inspection activities more difficult. He also expected the residential transaction volume in the first half of the year to be lower than that of the same period last year.

JLL Greater China head of research Nelson Wong said, "About 2,015 nano flats (saleable floor area of 215 sq ft or less) are forecasted for completion in 2022, the highest since records began in 2013. The government relaxed the mortgage cap for properties sold at $8m to $10m, which could ease the problem of nano flats as some buyers would shift to purchase a bigger flat at a higher price which will provide incentives to developers to build larger flats. The relaxation on the mortgage for flats priced at $12m or less could also help upgrade the housing ladder and support housing prices, which will have a positive impact on the housing market."

"The further relaxation of the property value cap of the eligible LTV should encourage developers to offer primary flats of bigger sizes in the future. At the same time, it could further open up more home options for the first-time buyers or upgraders in the secondary home market as they can now afford to hunt for a bigger-size property. For example, in the past, they might limit themselves to the $8m mark to look for a 'studio or one bedroom' flat. Now with the cap raised to $10m for a 90% LTV ratio, they can look for a 'reasonable size' flat (say 500-700 sqft) for better living environment," added Colliers Hong Kong head of valuation and advisory services Hannah Jeong.