Regulatory Alerts2001-10-10
Added · Updated
Refinancing of Residential Mortgage Loans in Negative Equity
The Hong Kong Monetary Authority permits authorized institutions to exceed the 70% loan-to-value guideline when refinancing residential mortgage loans in negative equity, provided the loan does not exceed 100% of the property's current market value. Authorized institutions must maintain normal prudent lending criteria, such as debt service ratios, and are reminded that loans exceeding 90% loan-to-value retain a 100% risk weight in perpetuity. Additionally, the regulator clarifies that the previous 60% loan-to-value guideline for luxury properties no longer applies, and such loans are now subject to the standard 70% maximum.
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