Prudential Measures for Property Mortgage Loans

On 27 February 2015 evening the Hong Kong Monetary Authority (HKMA) announced a new mortgage tightening measures. The new countercyclical measures are as follows:

1. The maximum loan-to-value (LTV) ratio for self-use residential properties with value below HK$7 million will be lowered by a maximum of 10% points. As such, the self-use residential property value below HK$7 million is subject to the LTV cap of 60%.

2. The maximum debt-servicing ration (DSR) for borrowers who purchase a second residential property for self-use will be lowered to 40% from 50%, and the stressed-DSR cap will be lowered to 50% from 60%.

3. The maximum DSR of mortgage loans for all non-self use properties, including residential properties, commercial and industrial properties and car park spaces, will be lowered to 40% from 50%, and the stressed-DSR cap will be lowered to 50% from 60%.

The above three countercyclical measures take immediate effect. However, mortgage applications for properties with provisional sale and purchase agreements signed on 27 February 2015 or earlier will not be affected.

The above information was extracted from the press release of Hong Kong Monetary Authority. For more information, please visit the website:

http://www.info.gov.hk/gia/general/201502/27/P201502270735.htm

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The publication contains information in summary form and is therefore intended for general guidance only.  This publication is not intended as legal, accounting or other professional advice and should not be relied upon as such.  If legal, accounting or other professional advice or expert assistance is required, the services of a competent professional should be sought.  Neither Reanda Lau & Au Yeung Limited nor any related entity shall have any liability to any person or entity that relies on the information contained in this publication.