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
    News

    FSB Sets Out Effective Practices for Cyber Incident Recovery

    FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.

    October 19, 2020 WebPage Regulatory News
    News

    HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol

    HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.

    October 16, 2020 WebPage Regulatory News
    News

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).

    October 16, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on BRRD2 Transposition

    HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).

    October 15, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on CRD5 Transposition

    HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.

    October 15, 2020 WebPage Regulatory News
    News

    BoE Publishes Reporting Schedule for Statistical Returns

    In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.

    October 15, 2020 WebPage Regulatory News
    News

    EC Welcomes Declaration by Member States on EU Cloud Federation

    EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.

    October 15, 2020 WebPage Regulatory News
    News

    PRA Updates Supervisory Statement on Counterparty Credit Risk

    PRA published the final policy statement PS22/20, which contains the updated supervisory statement SS12/13 on counterparty credit risk.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Update on Work to Address Market Fragmentation

    FSB published an update on its work to address market fragmentation. FSB is working in this area in collaboration with the other standard-setting bodies.

    October 14, 2020 WebPage Regulatory News
    News

    EBA Proposes to Revise Guidelines on Incident Reporting Under PSD2

    EBA proposed revisions to the guidelines on major incident reporting under the second Payment Service Directive (PSD2).

    October 14, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5967