Hong Kong mortgage loans hit 12-month high of US$3.4 billion as low rates lure refinancers

Hong Kong’s approved mortgage loans surged to a one-year high in May as more homebuyers sought to refinance their existing loans amid lower bank rates, according to data from the Hong Kong Monetary Authority (HKMA).

Banks approved HK$26.6 billion (US$3.39 billion) worth of loans in May, a 5.3 per cent rise from a month earlier, according to official data on Monday. It was the highest total since May last year when lenders extended about HK$31.6 billion in loans, according to data compiled by agents.

The increase came from approved mortgage loans for refinancing, which climbed 33.7 per cent to HK$3 billion. Mortgage loans for new and lived-in homes declined by 4.2 per cent to HK$8.9 billion and 7.1 per cent to HK$14.6 billion, respectively, according to the HKMA.

Meanwhile, mortgage loan applications rose 5 per cent to 8,187 in May from April, the highest since March’s 8,456 applications.

The increase came after the one-month Hong Kong interbank offered rate (Hibor), which is linked to mortgage loans, weakened to a 30-month low of 2.0945 per cent in early May, according to data from the Hong Kong Association of Banks. It has since declined further, standing at 0.72744 per cent as of Monday.

“Interest rates have dropped significantly, and large developers continued to launch low-priced properties to attract first-time buyers and investors to enter the market, boosting the overall market sentiment,” said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. “The real estate market will continue to stabilise and will drive the number of residential mortgages to rise further.”

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