First-time homebuyers ‘may be allowed to borrow more’
Financial secretary says he is considering the idea, but will not change stamp duty regime
Financial Secretary Paul Chan Mo-po has said he will consider allowing first-time homebuyers to borrow more money for a mortgage, but rejected calls to lift property cooling measures, including adjusting stamp duties.
“If we can, we will further ease the loan-to-value ratio for people who do not have their own homes but want to purchase one for selfuse. I will consider this,” Chan told the Legislative Council’s financial affairs panel yesterday.
He did not specify how much the city would relax the loan-tovalue ratio or when the measure would be rolled out if implemented.
The ratio is calculated by dividing the amount borrowed by the value of the property, expressed as a percentage.
Chan also rejected repeated calls by lawmakers to adjust stamp duties. He said the government had “no intention” of making any changes and would continue to observe the market.
“Currently, we think that while the [housing] supply is relatively limited, we will try to support or allow local residents who want to buy a flat to live in themselves to be prioritised,” Chan said.
“Residential property in the market is for living in, not for speculating, but there is nothing wrong with using residential property for investment.”
The government has previously made financing easier for homebuyers. In the 2022-23 budget, the cap on mortgages for homes with a loan-to-value ratio of 80 per cent was increased to HK$12 million from HK$10 million.
Turning to the outlook for the property market, Chan said the average combined number of monthly housing transactions in the primary and second-hand markets in the first five months of the year was about 4,500 deals and that the figure was “a bit on the low side”.
Louis Chan Wing-kit, CEO of the residential division at Centaline Property Agency, said he believed adjusting the loan-to-value ratio would help the overall housing market.
He suggested the government consider raising the loan-to-value ratio for first-time buyers to 95 per cent, or allowing the 80 per cent ratio to be applied to property worth up to HK$30 million.
“This will not only help residents get their first flat, but also help push up circulation of the property market while supporting housing prices,” Chan said.
Martin Wong, Greater China director and research head at property consultancy Knight Frank, said the total transaction volume should increase, especially for new sales, if the government relaxed the mortgage ratio for first-time buyers.
“However, as the current interest rate is still high, relaxing the mortgage ratio will not significantly increase market purchasing power. There will not be any obvious impact on home prices either,” he said.
Scott Leung Man-kwong, deputy chairman of Legco’s housing panel, said having a 95 per cent loan-to-value ratio for homes worth less than HK$12 million would help quite a few buyers who wanted to enter the market but did not have enough money for a down payment.
He said financial institutions would need to ensure borrowers were able to pay back the money, with authorities also making sure that the measure would not adversely affect the economy.
Leung said the government would also need to ensure corresponding measures were in place, such as the availability of lower-priced housing and help for people who did not have enough money for down payments.
Meanwhile, Paul Chan also provided his outlook for the local economy for the second and third quarters, saying tourism and local consumption would be the main drivers for growth. “The continued improvement of the labour market situation, the release of the consumption vouchers, as well as a series of ‘Happy Hong Kong’ events, the social atmosphere is more positive and optimistic,” the financial secretary said.
However, he said the external environment was still extremely challenging, with uncertainty over whether the US Federal Reserve would continue to raise interest rates and over the condition of the American economy.
Reiterating the government’s forecast for full-year economic growth of between 3.5 per cent and 5.5 per cent, he said that if the external environment did not deteriorate too badly, the city could reach the higher end of the estimate.