HK home loans down after new adjustment

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The amount of loans under Hong Kong Mortgage Corporation’s (HKMC) mortgage-insurance plan fell 36 percent in 2011 from a year ago, after it adjusted the programme to ensure that banks did not over-lend.

The volume of new loans drawn dropped to HK$26.3 billion (S$4.37 billion), making it more difficult for prospective home buyers to enter the market.

Currently, financial institutions are not allowed to lend over 70 percent of a property’s value to a borrower and can only lend below 70 percent of a higher-priced property’s value.

Through the plan, buyers who do not have enough cash for a down-payment can apply for extra mortgage insurance, where they can obtain up to a 90 percent loan.

Meanwhile, only 173 applications were approved under the plan last month, with eligible borrowers receiving an average monthly payment of HK$13,900 (S$2,313.32).

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