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Benefits of mortgage relaxation to be felt H2 2022: JLL

The government announced it will raise property values eligible for 90% and 80% LTV-ratio loans.

JLL's Hong Kong Residential Sales Market Monitor showed any property value boosting effects will only become more visible when the pandemic stabilises in the latter half of the year.

This comes after the Hong Kong Government's announced it will raise property values eligible for 90% LTV-ratio loans and 80% LTV-ratio loans to $10m and $12m, respectively.

According to JLL, the relaxation would likely carry similar effects as the previous Mortgage Insurance Programme (MIP) adjustment announced in October 2019 and could strengthen housing market sentiment and boost both transaction volume and prices.

While the latest arrangement is expected to benefit the overall housing market, some segments will benefit disproportionately. Specifically, the down-payment required for units priced between $10m and $12m will drop significantly from 50% to 20% of the property value, allowing upgraders to take on pricier options. Properties falling in this price range will likely benefit the most when the effects come into place.

Senior director of projects strategy and consultancy department Norry Lee said, "We believe the positive effects may be clouded by the fifth wave of the pandemic and current social distancing measures, resulting in considerably lower activity level in the housing market. In addition, with the market entering the rate hike cycle and potential buyers of mass and medium properties being relatively cost-sensitive, their buying sentiment is further dampened despite the latest MIP relaxation. We expect any boosting effects will only become more visible when the pandemic stabilises, which is likely in the latter half of the year."

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