HK cuts loan ratios, ups land supply

Hong Kong has lowered the loan-to-value (LTV) ratio for home mortgages and will release enough land to build 6,000 residential units in the July-September quarter, more than double the supply in the previous three months, as it steps up measures to cool the red-hot property market.

Apartments valued at between HK$10 million and HK$12 million (S$1.6 million to S$1.9 million) would have their LTV ratios lowered to 50 per cent, Hong Kong Monetary Authority chief executive Norman Chan said yesterday.

For flats valued at HK$7 million to HK$10 million, the LTV would be cut to 60 per cent and for those valued below HK$7 million, the LTV would be lowered to 70 per cent.

The maximum LTV for homes above HK$12 million will remain at 50 per cent.

In a move targeted at foreigners, borrowers with income not derived from Hong Kong will be subject to tighter mortgage restrictions. Mr Chan said the caps on their LTV ratios will be at least 10 percentage points lower.

At a separate media briefing yesterday, Secretary for Development Carrie Lam said seven sites would be put up for auction in the third quarter and an additional site around a railway project offered for tender.

“Since the beginning of this year we have adopted a far more progressive attitude in supplying land to the market, whether it is for residential or commercial development,” Ms Lam said.

Hong Kong’s Financial Secretary John Tsang also weighed in yesterday, warning of the risks of buying property.

“I urge citizens to think twice before entering the property market as the risk is higher now than ever,” he said.

Hong Kong has seen property prices rise 72 per cent since the beginning of 2009, according to housing agency Centaline. Amid a low interest rate environment and an improving economy in the territory, housing prices have risen 12.5 per cent so far this year – beyond their 1997 peak.

But analysts expect the pace to slow for the remainder of the year in response to the cooling measures and as banks gradually lift mortgage interest rates.

In April, the government had said 12 plots of land in the space-starved city would be put on the market between April and June, providing an estimated 2,650 residential units.

Source : Today – 11 Jun 2011

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