Hong Kong developers rush to offer bigger home loans to boost sales

Homes in Hong Kong are among the world’s most expensive, but getting a foot on the property ladder has become surprisingly easy recently, thanks to aggressive mortgage tactics by developers desperate to push sales in a falling market.

Offering home loans of up to 80 to 95 per cent of a flat’s value, without the need for proof of income, has become the sales tool of choice for many developers, allowing buyers to bypass strict guidelines on mortgages offered by banks but sparking concern that buyers may be setting themselves up for defaults and the loss of their homes should the economy remain sluggish.

“Developers provide a solution for those who cannot pass the banks’ mortgage stress tests. Recently, about half of the new flats sold have gone to buyers without regular incomes,” said Louis Chan Wing-kit, Centaline Property Agency’s managing director for residential.

These buyers, whatever their jobs, either had insufficient savings to make the down payment of 40 per cent of a flat’s value under banks’ standard mortgage lending requirements or were those able to pay upfront but whose monthly salaries failed to meet banks’ requirements, he said.

He expected some developers could even offer 100 per cent mortgages if the market deteriorated further.