Hong Kong has eased its mortgage rules, allowing homebuyers to pay a lower down payment in a bid to address the city’s ongoing property market slump. The loan-to-value (LTV) ratio for all residential properties has been set at 70%, reducing the required down payment for homes valued above HK$35 million. Previously, these homes had an LTV ratio of 60%. Additionally, the LTV ratio for company-held properties has also been raised to 70% from 60%.
These changes took effect immediately, with the Hong Kong Monetary Authority (HKMA) stating there is room for adjustments due to the softening property market in recent months. Furthermore, Hong Kong’s New Capital Investment Entrant Scheme has been expanded to allow investment in homes valued at HK$50 million or more, with a cap of HK$10 million on the amount counted towards total capital investment.
Following the announcement, the Hang Seng Property Index rose as much as 3.9%, outperforming the main Hang Seng Index.
However, the property market remains under pressure due to high borrowing costs, an oversupply of homes, and a weak economy. Experts suggest that while these changes may attract high-net-worth individuals and boost luxury property transactions, the general residential market may not see significant improvement in the short term.
With housing inventory at a 20-year high, residential prices are expected to remain under pressure despite the recent interest rate reductions in Hong Kong.
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