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<HK Home>HKMA Launches One-off Special Scheme, Allowing Banks to Relax Max. LTV Ratio to 80%
The Hong Kong Monetary Authority (HKMA) today (4th) issued guidelines to banks on the introduction of a one-off special scheme that allows for a relaxation of the supervisory requi...
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<HK Home>HKMA Launches One-off Special Scheme, Allowing Banks to Relax Max. LTV Ratio to 80%
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The Hong Kong Monetary Authority (HKMA) today (4th) issued guidelines to banks on the introduction of a one-off special scheme that allows for a relaxation of the supervisory requirements on the maximum loan-to-value (LTV) ratio and debt servicing ratio (DSR) limit for property mortgage loans. The special scheme aims to provide flexibility for banks to assist homebuyers who bought uncompleted residential properties during 2021 to 2023 using stage payment plans to complete their property transactions.

Official residential property prices fell by over 25% from their peak three years ago, the HKMA said. Some stage payment homebuyers of uncompleted residential properties may find the property valuation at the time of mortgage application to be lower than the purchase price, and hence face difficulty in securing extra funds for the down payment. Meanwhile, some banks have expressed to the HKMA their willingness to help these homebuyers in genuine hardship if the associated risk is manageable.

After balancing various considerations, the HKMA considers that a one-off special scheme can be introduced to assist stage payment homebuyers who bought uncompleted residential properties during the peak of the property market, while continuing to ensure the proper risk management of banks’ property mortgage lending business. Under this special scheme, banks may provide mortgage loans with a maximum LTV ratio of 80% to eligible homebuyers and the DSR limit is adjusted to 60%.

The special scheme covers uncompleted residential properties for self-occupation where the provisional sale and purchase agreements were signed during the period from 1 January 2021 to 31 December 2023 and the buyers had opted for stage payment plans, and the date of the mortgage application of the relevant property is today or subsequently. Furthermore, the property valuation at the time of mortgage application should be lower than the purchase price.

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