Hong Kong May End Mortgage Insurance for Investment

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Bloomberg The Hong Kong Mortgage Corp. may scrap a program that offers mortgage insurance for investment properties as the city’s central bank tries to prevent a real estate bubble. The HKMC, provider of insurance that lets home buyers borrow more than 70 percent of the purchase price, and 10 local banks will offer fixed-rate mortgages to people buying housing to live in, Chief Executive Officer James Lau told a news conference today. Home prices in Hong Kong have rallied this year on record- low interest rates and an influx of money from China. Sales of homes worth more than HK$10 million ($1.3 million) almost tripled in September, according to the Land Registry. Hong Kong Chief Executive Donald Tsang signaled Oct. 14 his government may release more land for developers. “We’re not in a bubble yet” in the mass housing market, said Peter Churchouse, chairman of property investment firm Portwood Capital. “High-end luxury is where the concern really is. That represents no more than 5 percent to 10 percent of the market.” The city’s six-member Hang Seng Property Index rose 0.47 percent today, bringing its year-to-date advance to 78 percent. The benchmark Hang Seng Index was up 55 percent for the year by today’s close. Hong Kong home prices have risen 30 percent this year to the highest since March 2008, according to the Centa-City Leading Index compiled by Centaline Property Agency Ltd. and the City University of Hong Kong. Down Payments Prices of luxury homes may rise further because of a lack of supply as an economic recovery spurs demand, Savills Plc said yesterday. Hong Kong may increase down payments for homes priced at more than HK$20 million to 40 percent from 30 percent, Ming Pao said today, without saying where it obtained the information. Hong Kong Monetary Authority Chief Executive Norman Chan met representatives from five banks yesterday to hear views about financial markets, including the property and mortgage lending markets, said an HKMA spokeswoman who declined to be identified. She declined to comment on the Ming Pao report. People invited to the meeting with Chan, who started as HKMA chief this month, included Peter Wong, head of HSBC Holdings Plc’s Hong Kong unit and Hang Seng Bank Ltd. Chief Executive Officer Margaret Leung, according to today’s Standard newspaper. Buying in Cash Since most luxury-home buyers pay in cash, tightening lending requirements or raising mortgage rates will do little to cool the market, the English-language newspaper said, citing an unidentified banker. The average home price for buyers applying for mortgage insurance is about HK$2 million, Hong Kong Mortgage Corp.’s Lau said today. Foreign buyers, especially, tend to prefer duplexes and penthouses over standard apartments in Hong Kong, Peter Yuen, Savills’s senior director in Hong Kong, told reporters at a briefing yesterday. Henderson Land Development Co., controlled by billionaire Lee Shau-kee, said last week that it sold a duplex apartment for HK$439 million, or HK$88,000 a square foot. To contact the reporter on this story: Theresa Tang at ttang3@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it