Featured Product

    HKMA Relaxes Prudential Measures for Non-Residential Property Loans

    August 19, 2020

    HKMA announced adjustments to the prudential measures for mortgage loans on non-residential properties, in view of the impact of COVID-19 outbreak and the rising geopolitical tensions. The applicable loan-to-value ratio caps for mortgage loans on non-residential properties have been adjusted upward by 10 percentage points, from 40% to 50% for general cases. The Annex to the HKMA Circular sets out the applicable loan-to-value ratio caps and debt-servicing ratio limits for various residential and commercial property mortgage loans under different scenarios. The announced adjustments take effect from August 20, 2020.

    With business confidence continuing to be affected by the COVID-19 pandemic and the rising geopolitical tensions, non-residential property market has contracted in the first half of 2020 and is likely to remain under pressure. In view of these developments, HKMA considers it appropriate to adjust the countercyclical macro-prudential measures for mortgage loans on non-residential properties. The measure applies to transactions where the provisional sale and purchase agreement is signed on or after that date. There are no changes to the other countercyclical macro-prudential measures including those relating to residential properties. HKMA also reiterated in its circular that its countercyclical macro-prudential measures are intended to apply to mortgage loans for the purpose of financing property transactions or the refinancing of existing properties. They are not intended to apply to credit facilities secured by properties for the purpose of financing the business operation of corporates, as these credit facilities are subject to a set of comprehensive credit underwriting standards and regular credit reviews by authorized institutions.


    Effective Date: August 20, 2020

    Keywords: Asia Pacific, Hong Kong, Banking, Mortgage Loans, Loan to Value Ratio, RRE, CRE, Macro-Prudential Policy, Basel, Credit Risk, COVID-19, HKMA

    Featured Experts
    Related Articles

    CFPB Finalizes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.

    March 30, 2023 WebPage Regulatory News

    BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023

    The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.

    March 23, 2023 WebPage Regulatory News

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    US Congress Report Examines Data Privacy and Cybersecurity Regulations

    The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    EU to Conduct One-Off Scenario Analysis to Assess Transition Risk

    The European authorities recently made multiple announcements that impact the banking sector.

    March 10, 2023 WebPage Regulatory News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8810