Hong Kong's mortgage market flourishes in August

Demand's picked up following DDS rule refinement.

The August mortgage survey showed new mortgage loans drawn down increased to HK$18.9bn, +1.4% m/m (July: +5.9%).

According to a research note from Barclays, outstanding mortgages increased 0.7% m/m as new mortgage loans booked offset principal repayments.

Meanwhile, demand for mortgages has picked up after the government fine tuned the Double Stamp Duty (DSD) rule in mid-May 2014.

Here's more from Barclays:

There has been a continued shift from Prime to Hibor-based mortgages since 3Q13 with the proportion of Hibor based of total new mortgages approved at 82% (vs. 26% in September 2013).

The average system mortgage rate decreased slightly to 2.23% (July: 2.25%) on our calculations and will likely not decline further after the 15% mortgage risk weight floor limit imposed by the HKMA since February 2013.