Regulatory Alerts1999-10-29
Added · Updated
Refinancing of Residential Mortgage Loans
The Hong Kong Monetary Authority issued this circular to remind authorized institutions of the need to maintain prudent lending standards amid a surge in residential mortgage refinancing. The regulator requires banks to critically review the commercial rationale for refinancing strategies to prevent a self-defeating cycle of margin erosion and to strictly adhere to the 70% loan-to-value guideline based on current property valuations. Additionally, the HKMA mandates that institutions ensure proper conduct in marketing practices, particularly regarding cash rebates and the fair representation of costs and benefits to customers.
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