Mortgage cover at 10-month high as home sales surge

But new policies in first four months are under half of last year’s, and are at lowest since 2019

Mortgage insurance for residential property in Hong Kong continues to rise amid a jump in transactions following the removal of cooling measures, hitting a 10-month high in April.

Newly approved mortgage insurance rose 53 per cent in value to HK$13.71 billion and 47 per cent to 2,613 in terms of applications in April, compared with February, according to data from mortgage broker mReferral yesterday. It was the highest since HK$16.07 billion from 2,847 cases in June last year.

The increase comes on the back of a surge in sales of new and second-hand homes, which jumped 115 per cent month on month to 8,551 units in April, according to Land Registry data released last week.

In his budget speech on February 28, Financial Secretary Paul Chan Mo-po announced the lifting of all property curbs put in place more than a decade ago to cool the market. The Hong Kong Monetary Authority simultaneously eased mortgage financing, making homes valued at less than HK$30 million eligible for 70 per cent mortgages, compared with the previous cap of 60 per cent for homes valued between HK$15 million and HK$30 million.

Under the Hong Kong Mortgage Corporation’s insurance programme, banks will be protected from losses on the portion of the loan over the 70 per cent value in case of defaults by borrowers.

While the numbers are on the rise, they are nowhere near last year’s level. In the first four months of the year, newly approved mortgage insurance amounted to HK$43.43 billion from 8,450 cases, the lowest for the first four months of the year since 2019. The comparable data for the January to April period last year was more than double, at HK$96.91 billion from 17,498 cases.

“Property transactions in both the first and second-hand markets have picked up after the withdrawal of all property cooling measures,” said Tso Tak-ming, chief vice-president of mReferral.

“This has led to a significant increase in demand for mortgages, as the proportion of new buyers in the primary market choosing the immediate payment method for uncompleted residential buildings has increased significantly.”

Transactions in both the first and second-hand markets have picked up TSO TAK-MING, MREFERRAL

In addition, buyers of new flats who chose stage payment some years ago have started to move in as these residential buildings have been completed, which has also led to an increase in the number of mortgages, he said.

“But the property market seems to be slowing down a bit after a surge in March and April,” Tso said, adding that the number of mortgages would gradually increase this quarter.

A widely followed official gauge of Hong Kong’s secondary homes showed prices increased by an average 1.06 per cent in March, the first rise in 11 months.

The index climbed to 305.7 from 302.5 the previous month, according to the Rating and Valuation Department. However, prices are still 13.2 per cent lower than a year ago.