Regulatory Alerts1997-07-28
Added · Updated
HKMA Guidance on Prudent Property Lending and Credit Risk Management
The Hong Kong Monetary Authority issued this directive to address rapid growth in property lending and mitigate associated credit risks by requiring strict adherence to existing prudential standards. The guidelines mandate the prohibition of top-up loans used for downpayments, enforce debt servicing ratio tests capped at 50-60 percent of income, and prohibit the relaxation of lending criteria to compete for market share. Furthermore, institutions with above-average property exposure are instructed to stabilize their portfolios through conservative pricing and forward-looking budget monitoring to prevent undue concentration risk.
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