HK tightens home loans on bubble risk

The Hong Kong Monetary Authority (HKMA) said yesterday it has ordered banks to toughen lending requirements for borrowers with more than one mortgage on residential property, in a bid to prevent the city from being flooded with “hot money” after the United States announced an aggressive new stimulus plan to spur growth.

Hong Kong’s de facto central bank also said it had restricted the maximum length for home mortgages to 30 years. Some banks had been offering mortgages of up to 40 years.

The move comes after the HKMA chief Norman Chan told reporters earlier that the latest stimulus from the US Federal Reserve increased the risk that Hong Kong’s red-hot property market would overheat and that authorities would introduce “suitable measures at the appropriate time”.

“The risk of an overheating property market also suggests a potential asset bubble,” Mr Chan added.

Source : Today – 14 Sep 2012

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