Regulatory Alerts1995-10-30
Added · Updated
Co-financing schemes in relation to residential mortgage lending
The Hong Kong Monetary Authority issues this guideline to reinforce the policy that lending banks must finance no more than 70% of a property's value in residential mortgage co-financing schemes. Authorized institutions are explicitly requested not to provide the top-up element of such schemes, whether through direct loans or second mortgages, to prevent the appearance of breaching loan-to-value limits. Additionally, banks must calculate borrower debt servicing capacity as if no interest-free holiday exists on top-up loans and apply conservative valuation policies if property prices have been inflated to reflect such terms.
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