Hong Kong Raises Limit on Loan Mortgages

The Hong Kong Monetary Authority (HKMA) announced on Friday, July 7, that Hong Kong is raising the cap on loan-to-value (LTV) ratio for properties up to HK$30 million (US$3.83 million) for self-use homebuyers. This is the first easing of tightening measures for home transactions since they were put into place in 2009.

According to HKMA Chief Executive Eddie Yue, the adjustments, which take effect on Friday, are meant to assist residents in buying or upgrading their homes as prices have fallen 13% since their peak in 2021.

On residential properties worth up to HK$15 million, self-use homebuyers will be able to borrow up to 70% of the purchase price, and between HK$15 million and HK$30 million, they can borrow 60%. From 50%, the ratios both increased.

LTV ratio is the percentage of a property's value that is mortgaged. A relaxation on the ratio cap means prospective home buyers will not need so much money upfront.

"Even with these adjustments, the Hong Kong banking sector has ample buffers to cope with any challenges from a sharp correction in property prices, therefore we consider there's enough room to relax these measures," Yu said.

For homes valued more than HK$30 million, and all non-self-use residential properties, the maximum LTV ratio will remain unchanged at 50 per cent, HKMA added.