HKMA Announces Amendments to Mortgage Insurance Program for Banks
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
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
EBA Sets Out Work Priorities and Deliverables for 2021
EBA published its annual work program for 2021. The work program describes the activities and deliverables for the coming year in the context of the six key strategic areas of work.
PRA Proposes to Amend SS11/13 on Internal Ratings-Based Approaches
PRA is proposing, via the consultation paper CP14/20, to introduce two complementary expectations on the level of mortgage risk-weights in UK for banks applying the internal ratings-based approaches.
ECB Confirms Compliance of €STR with Financial Benchmark Principles
ECB published its statement of compliance with the IOSCO principles for financial benchmarks developed by IOSCO.
OSFI Updates Timelines for Implementation of IFRS 17
OSFI updated the timelines for implementation of IFRS 17 on insurance contracts.
IFRS Consults on Global Approach to Sustainability Reporting
IFRS launched a consultation to assess the demand for global sustainability standards.
EIOPA Sets Out Work Priorities for 2021-2023
EIOPA has set out the work priorities for 2021-2023, taking into account the current market situation in light of the COVID-19 pandemic.
US Agencies Finalize Three Interim Final Rules Issued Amid Pandemic
US Agencies (FDIC, FED, and OCC) finalized three interim final rules that were published in March and April this year to ease the impact of disruptions caused by the COVID-19 pandemic.
US Agencies Finalize Interim Final Rules Issued Amid Pandemic
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
APRA Proposes to Increase Transparency of Banking Data
APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
EIOPA Consults on Use of Risk Mitigation Techniques Under Solvency II
EIOPA is consulting on a supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings.
