The Hong Kong Monetary Authority (HKMA) issued guidance to banks on the 4th, introducing a one-time special arrangement that allows relaxing the maximum loan-to-value ratio and the 'payment-to-income ratio' limits regulatory requirements so that banks can flexibly assist homebuyers who have chosen to make payments during the construction period for residential properties, from 2021 to 2023, to complete property transactions.

The HKMA stated that in the past three years, official residential property prices have fallen by over 25% from their peak. Some homebuyers who purchased residential properties under construction and chose to make payments during the construction period may encounter situations where the property valuation is lower than the fill price when applying for a mortgage, facing difficulties in raising additional down payment. At the same time, some banks have expressed to the HKMA their desire to assist these homebuyers who are facing practical difficulties in a controllable risk environment.

After balancing various considerations, the HKMA believes that under the premise of banks properly managing the risks of property mortgage business, a one-time special arrangement can be introduced to assist homebuyers in purchasing residential properties under construction during the high phase of the property market with payments during the construction period. Under this special arrangement, banks can provide homebuyers who meet the criteria with a maximum of 80% of the mortgage loan, and increase the 'payment-to-income ratio' limit to 60%.

This special arrangement covers temporary sales and purchase agreements signed between January 1, 2021 and December 31, 2023, for residential properties purchased for self-use with payments during the construction period, where the mortgage application date for the property is today or later. In addition, the property valuation at the time of the mortgage application must be lower than the fill price.