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
BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting