Special Mortgage Scheme for Uncompleted Residential Properties
The Hong Kong Monetary Authority (HKMA) today (4 December) issued
guidelines to banks on the introduction of a one-off special scheme
that allows for a relaxation of the supervisory requirements on the
maximum loan-to-value (LTV) ratio and debt servicing ratio (DSR) limit
for property mortgage loans. The special scheme aims to provide
flexibility for banks to assist homebuyers who bought uncompleted
residential properties during 2021 to 2023 using stage payment plans
to complete their property transactions.
Official residential
property prices fell by over 25% from their peak three years ago. Some
stage payment homebuyers of uncompleted residential properties may
find the property valuation at the time of mortgage application to be
lower than the purchase price, and hence face difficulty in securing
extra funds for the down payment. Meanwhile, some banks have expressed
to the HKMA their willingness to help these homebuyers in genuine
hardship if the associated risk is manageable.
After
balancing various considerations, the HKMA considers that a one-off
special scheme can be introduced to assist stage payment homebuyers
who bought uncompleted residential properties during the peak of the
property market, while continuing to ensure the proper risk management
of banks’ property mortgage lending business. Under this special
scheme, banks may provide mortgage loans with a maximum LTV ratio of
80% to eligible homebuyers and the DSR limit is adjusted to 60%.
The special scheme covers uncompleted residential properties
for self-occupation where the provisional sale and purchase agreements
were signed during the period from 1 January 2021 to 31 December 2023
and the buyers had opted for stage payment plans, and the date of the
mortgage application of the relevant property is today or
subsequently. Furthermore, the property valuation at the time of
mortgage application should be lower than the purchase price.
As the mortgage terms offered by each bank may differ,
eligible applicants who have any needs or questions are advised to
enquire with banks that are offering such special scheme as soon as
possible.
On many past occasions, the HKMA has reminded
prospective buyers of uncompleted residential properties to be mindful
of the risk of failing to complete the property transaction if they
opt for stage payment plans. The above-mentioned special scheme is a
one-off exceptional arrangement for stage payment homebuyers who
bought uncompleted properties during the property market peak in
recent years and have difficulty in securing extra funds for the down
payment. Banks are still required to conduct their property mortgage
business prudently.
The HKMA would once again like to remind
prospective buyers wishing to opt for stage payment plans that, if the
market value of the uncompleted residential property falls below the
purchase price, banks will use the property valuation at the time of
mortgage application to calculate the mortgage loan amount. As a
result, the loan amount approved by the bank may be lower than
originally planned and buyers must bear the related risks if they are
unable to secure extra funds for the down payment. The public should
carefully assess their own affordability and prudently manage the
financial risks involved when making property purchase decisions and
selecting the payment plan. Hong Kong Monetary Authority 4 December
2024