Regulatory Alerts2009-09-17
Added · Updated
HKMA Circular on Residential Mortgage Loans Pricing and Risk Management
The Hong Kong Monetary Authority warns authorized institutions against aggressive mortgage pricing that ignores reputation, interest rate, and liquidity risks. The regulator requires banks to price loans based on long-term average Prime-HIBOR spreads and conduct stress tests to ensure sustainability and adequate liquidity coverage. The HKMA will individually review institutions' pricing strategies to verify they do not expose the banks to undue risk or hinder their ability to obtain emergency funding.
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