Regulatory Alerts2005-02-28
Added · Updated
HKMA Circular on Residential Mortgage Loans and Cash Rebates
The Hong Kong Monetary Authority issued this circular to address the risks associated with authorized institutions offering excessive cash rebates and interest holidays for residential mortgage loans. It mandates that cash rebates exceeding 1% of the loan amount must be included in the loan principal for loan-to-value ratio calculations, while developer-subsidized rebates require using the discounted property price to determine the valuation basis. Additionally, the regulator requires strict credit assessments, including prudent debt servicing ratio tests and adequate disclosure of all monetary incentives to ensure transparency and compliance with the 70% guideline.
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