Hong Kong Eases Mortgage Rules to Revive Housing Market

In a bid to rejuvenate its struggling property market, the Hong Kong Monetary Authority (HKMA) has relaxed mortgage restrictions, standardizing the loan-to-value (LTV) ratio at 70% and raising the debt servicing ratio (DSR) to 50%. These changes, effective immediately, revert mortgage policies to pre-2009 levels, addressing a significant downturn where residential property prices fell by 6.2% in the first eight months of 2024. Chief Executive John Lee's announcement also included measures to support affordable housing for those under 40 and attract wealthy migrants to invest in luxury properties. While the adjustments have been met with optimism, particularly in the luxury segment, analysts caution that the overall impact on the residential market may be limited due to ongoing economic challenges. The changes have already positively influenced the Hang Seng Property Index, which rose by 3.9%. HKMA officials maintain that the banking sector remains resilient against potential property price corrections.