Regulatory Alerts2008-03-20
Added · Updated
Prohibition on New Residential Mortgage Loans with Principal Repayment Holidays
The Hong Kong Monetary Authority issued this circular to prohibit authorized institutions from offering new residential mortgage loans featuring principal repayment holidays of two to three years. This directive addresses regulatory concerns that such practices expose lenders to significantly higher risks in the event of loan default. The HKMA mandates immediate compliance for new products while allowing existing approved loans to continue, and reiterates the necessity of adhering to prudent underwriting criteria including loan-to-value and debt-servicing ratios.
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