Non-residential Mortgage Restrictions To Be Eased

The Hong Kong Monetary Authority (HKMA) on Wednesday announced that mortgage requirements on non-residential properties will be eased starting on Thursday, citing falling prices and transactions for office, industrial and retail spaces amid the coronavirus pandemic.

The maximum loan-to-value ratio for such properties will go up to 50 percent from the current 40 percent maximum, meaning buyers can put up 10 percent less money up front for their down payments.

HKMA Deputy Chief Executive Arthur Yuen said business confidence has been affected by both the coronavirus pandemic and rising geopolitical tensions – resulting in a ‘significant adjustment’ in both the volume and value of non-residential property sales – even as the residential market remains robust.

Yuen said the authority believes it is the right time to relax the mortgage requirement, having considered the recent market trends, Hong Kong’s economic fundamentals, and the external economic environment.

He added that uncertainties remain for both the property market and the overall economy, and the HKMA will continue to monitor developments and introduce ‘appropriate measures’ to respond to any cyclical changes in the property market to maintain the stability of the city's banking system.

This is the first time the authorities have relaxed any property restrictions since it lowered the threshold for properties eligible for 90-percent mortgage loans in October last year.