Regulatory Alerts2010-01-08
Added · Updated
HKMA Guidance on Residential Mortgage Loans and Cash Rebates
The Hong Kong Monetary Authority issued this directive to address risks from excessive cash rebates and interest holidays in residential mortgage lending. Authorized institutions must treat cash rebates exceeding 1% of the loan amount as part of the loan principal for LTV calculations and use the lower of the discounted purchase price or valuation when developer subsidies are involved. Additionally, banks are required to conduct rigorous credit assessments, ensuring debt servicing ratios remain within 50-60% and that all repayment obligations are accurately accounted for.
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