The situation could only go worse if local interest rates rise.
Rising household debt continues to weigh heavily on Hong Kongers as the steady increase of property prices continue to fall beyond residents’ purchasing power as wage growth still lags behind price growth, according to OCBC Bank’s weekly macro views.
With an expectation of a prime rate hike this year as mortgage loans with higher loan-to-value ratio are increasingly attracting prospective homebuyers into the primary housing market, the debt burden is poised to only weigh heavier on households in the coming years, OCBC added.
Moreover, a local interest rate hike is likely to aggravate the debt situation.
Despite the rising debt figures, OCBC believes that the housing market is not set to collapse any time soon as household debt to GDP ratio still remains low compared to other developed countries.
The Hong Kong Monetary Authority reports that household debt to GDP ratio reached a record high at 69.1% in Q32017.
Moreover, a series of cooling measures have also helped reduce the risks associated with mortgage loans as average repayment to income ratio rose to 35% in November 2017.
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