Regulatory Alerts2010-01-08
Added · Updated
Residential Mortgage Lending Annex 1: Residential Mortgage (RML)
The Hong Kong Monetary Authority warns authorized institutions against aggressive mortgage pricing that ignores reputation, interest rate, and liquidity risks. Regulators require banks to manage Prime-HIBOR basis risk by pricing in reasonable margins based on long-term spreads and conducting stress tests to ensure sustainability. The HKMA will individually review institutions' pricing strategies to verify they provide adequate margins and do not impair liquidity management capabilities during stressed conditions.
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