The Hong Kong Monetary Authority (HKMA) has instructed local banks to tighten lending requirements for home buyers who already have a mortgage, reported the China Daily.
The move marks the fifth round of measures to stop property prices from rising further, following the US government’s move to implement a third round of quantitative easing (QE3).
As a result, mortgage payments of home buyers who already own one property cannot exceed 40 percent of their monthly income, down from the 50 percent limit allowed. This means that second-timers have to pay 10 percent more down-payment when applying for a new mortgage.
Aside from that, the HKMA also capped the maximum tenure for new home mortgages to 30 years to lower the risks incurred by local banks, since some banks had been offering loans of up to 40 years.
“The QE3 policy leads the market to perceive that local home prices will rise further, however, this market expectation is deviating from the fundamentals so that the risk of an asset bubble formation is growing,” said Financial Secretary John Tsang.
He added that “the government will introduce more measures if necessary and it will review the Special Stamp Duty (SSD) policy by the end of this year”.
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