FINANCIAL SERVICES | Staff Reporter, Hong Kong

Mortgage loans down 20.7% to $23.5b in December

Weakening property demand has weighed on loan growth.

The volume of residential mortgage loans approved in December dropped 20.7% MoM to $23.5b in line with the ongoing housing downturn in Hong Kong, according to a government statement. 

Mortgage loans financing primary market transactions decreased 25.2% to $6.5b whilst those financing secondary market transactions dropped 12.5% to $7.7b. Those for refinancing fell 23.3% to $9.3b.

Banks in Hong Kong have been grappling with a slowdown in mortgages and home development loans as the weakness in the housing market persists.

Also read: Banks make do with falling loan growth as earnings lifeline

“Weakening property demand is likely to weigh on residential mortgages, and the expansion of 9.1% y-o-y as of October 2018 (versus 8.1% y-o-y a year ago) is likely to wane,” Fitch Solutions said in a report. “Loans headed towards residential property development remains at a weak rate of 2.7% YoY in September 2018, well below the highs of 24.8% YoY.”

The number of mortgage applications in December correspondingly fell 21.2% MoM to 7,435. The outstanding value of mortgage loans increased 0.4% MoM to stand at $1.31t. 

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