HONG KONG - Even as Hong Kong has reduced downpayment requirements to help young professionals and families to buy homes, banks are beefing up mortgage application standards to ensure that a recession does not saddle them with bad loans, bankers and mortgage brokers said.
But as the protests take a heavy toll on the special administrative region's economy, banks fear a deepening recession, unemployment and bankruptcies, which could make it hard for borrowers to pay them back, two bankers said.HSBC, one of the top mortgage lenders in Hong Kong, recently issued a guideline that buyers cannot have a mortgage payment that exceeds 65 per cent of their monthly income, must hold a full-time job and own no other property, said two industry sources.
"We have to use all the tools... to protect our profitability and asset quality in this environment. You will see more measures in the next few months," said a Hong Kong-based banker with a European bank. Standard Chartered said it would continue its"prudent approach to risk management and returns" and would closely monitor the market situation to review its strategy. Bank of China Hong Kong did not respond to a request for comment.
"We got more enquiries from clients who were not clear about their repayment capability," said Cookie Wong, a managing director of Ricacorp Mortgage Agency."Some of their income only reaches the bottom line of the requirements, unlike before, when those buying the HK$10 million flats were much more cash sufficient."
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