The Hong Kong Monetary Authority issued guidance to banks today (16th), revising the countercyclical macroprudential measures applicable to property mortgage loans.

Taking into account various considerations, the Hong Kong Monetary Authority believes that there is room to further revise the countercyclical macroprudential measures while continuing to maintain the stability of the banking system and ensuring proper management of risks associated with property mortgage loans:

First: The maximum loan-to-value ratio for all residential properties, regardless of their value or occupancy, is unified at seventy percent.

Second: The maximum loan-to-value ratio for property mortgage loans based on "asset level" has been increased from sixty percent to seventy percent, aligning with property mortgage loans based on "payment-to-income ratio". This revision applies to all residential and non-residential properties (including offices, shops, and industrial buildings).

Third: The upper limit of the "payment-to-income ratio" for non-self-occupied properties has been raised from forty percent to fifty percent, aligning with the upper limit for self-occupied properties. This revision applies to all residential and non-residential properties.

Fourth: The requirement to lower the applicable maximum loan-to-value ratio and upper limit of the "payment-to-income ratio" by ten percentage points if the mortgage applicant has made loans or guarantees on other mortgaged properties at the time of applying for the mortgage has been removed.

After the revision, the maximum loan-to-value ratio for all residential and non-residential properties is unified at seventy percent, while the upper limit of the "payment-to-income ratio" is unified at fifty percent.

The above revisions take effect immediately and apply to property transactions where provisional sales and purchase agreements are signed today or later. These revisions also apply to mortgage applications for previously signed provisional sales and purchase agreements for newly built properties that are expected to be completed today or later.

HKMA Chief Executive Eddie Yue stated that the HKMA this time decided to revise the countercyclical macroprudential measures for mortgage loans in response to market developments, reinstating the maximum loan-to-value ratio and the 'debt servicing ratio' limit to the levels before the implementation of the countercyclical measures in 2009. Even with the measures announced today, the Hong Kong banking system still has sufficient buffers to address the challenge of significant price adjustments once they occur in the property market. He once again reminded the public that property ownership is a long-term commitment, and when making decisions to purchase a property, one should carefully assess the risks and act prudently.

The HKMA will continue to closely monitor market developments and introduce appropriate measures to safeguard the stability of the banking system in response to the latest situation in the property market.