HKMA notified that HKMC Insurance Limited (HKMCI) announced amendments to the Mortgage Insurance Program. HKMA has reviewed the revised terms of the Mortgage Insurance Program and is agreeable to authorized institutions granting residential mortgage loans to eligible mortgage borrowers under those terms. The Mortgage Insurance Program is a market-based financial product that aims to promote home ownership. The amended Mortgage Insurance Program became effective from October 16, 2019.
HKMA explains that the objectives of the Mortgage Insurance Program offered by HKMCI and the countercyclical macro-prudential measures on property mortgage loans introduced by HKMA are different. HKMCI manages its risks through adjustments to the mortgage insurance premiums while following risk-based principles. This differs from the countercyclical macro-prudential measures of HKMA, the intent of which is to ensure stability of the banking system through implementation of appropriate measures corresponding to the development of the property cycle, taking into consideration key factors such as the trend of property prices, property transaction volume, economic fundamentals, and the external environment. HKMA does not consider it appropriate to relax the countercyclical macro-prudential measures at this juncture. HKMA will closely monitor the market situation and introduce appropriate measures as and when necessary to safeguard banking stability.
The following amendments will be made to the Mortgage Insurance Program for completed residential properties, to provide assistance to home buyers with immediate housing needs:
- The maximum property value eligible for mortgage loans up to 80% loan-to-value (LTV) ratio is HKD 10 million.
- For mortgage loans with up to 90% LTV ratio applicable to first-time home-buyers, the maximum property value is HKD 8 million.
- For home buyers taking mortgage loans with property values going beyond the existing caps, an additional 15% premium will be charged which can be paid together with mortgage repayment on a monthly basis.
- The maximum debt-to-income (DTI) ratio for both the above-mentioned and the existing Mortgage Insurance Program loans will be set at 50% and borrowers have to meet the stressed DTI ratio.
Effective Date: October 16, 2019
Keywords: Asia Pacific, Hong Kong, Banking, LTV, Macro-Prudential Measures, HKMCI, HKMA, Mortgage Insurance Program, Credit Risk
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.