New home mortgage approvals rose 10.9 percent to HK$19.3 billion in August thanks to the city's fast growing economy, according to the Hong Kong Monetary Authority (HKMA).
The jump was due to an HK$300 million increase in approvals for primary market transactions and a HK$1.7 billion surge in approvals for secondary market transactions in August from July, said HKMA, Hong Kong's banking regulator.
The number of new applications increased 19.4 percent during the period.
Property market analysts expect new approvals to soar further in the months ahead because rising inflation has sparked negative interest rates, causing more people to seek alternative investments rather than bank deposits.
"The climbing inflation rate makes the property market more active. I expect there will be more new approvals made in the months to come," said Wong Leung-sing, associate director of the research department at Centaline Property Agency.
Wong expects the turnover in the secondary property market to increase by 20 percent to 30 percent next month, adding that the reduction in prime lending rates last week should also boost the property market.
Escalating food prices pushed the core inflation rate to 2.7 percent in August, higher than some deposit rates, which were as low as 2 percent, after some banks cut their saving rates last week.
Although some lenders indicated that they might raise mortgage rates, other large lenders were still offering home-loan rates as low as 3 percentage points below prime rates to attract borrowers.
The proportion of new loans approved at more than 2.5 percentage points below the best lending rate increased to 93 percent from 90.9 percent in July, while the proportion of new approvals priced with reference to rates other than the best lending rate or fixed rates decreased to 3.3 percent from 5.2 percent over the same period.
Mortgage loans' outstanding value increased 0.7 percent to HK$542.3 billion, the HKMA said.
The mortgage delinquency ratio declined further to 0.13 percent. With the rescheduled loan ratio unchanged at 0.23 percent, the combined ratio improved to 0.36 percent. Both the mortgage delinquency ratio and the combined ratio reached record lows in August.
HKMA conducts the monthly survey of residential mortgage lending, covering 23 authorized institutions, including banks and other financial institutions.
Hong Kong's mortgage industry is one of the most developed in Asia.
Source:China Daily
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