Hong Kong extends fixed-rate mortgage scheme by a year
- Charles Chau
- Topics: Compensation and Benefits, Home Page - News, Hong Kong, Job Cuts, News
The Hong Kong Mortgage Corporation (HKMC) has extended the application period for a fixed-rate mortgage scheme till 30 October 2021 amid rising unemployment and recession due to COVID-19.
Mortgage interest rates under this scheme have also been lowered since 7 May when it was first rolled out. For example, the rate for the 10-year fixed-rate period fell from 2.55% in May to 1.99% starting November.
“The Fixed-rate Mortgage Pilot Scheme aims to provide an alternative financing option to homebuyers for mitigating their risks arising from interest rate volatility, thereby enhancing banking stability in the long run,” said HKMC in a press statement.
The aggregate loan amount of the scheme is HK$1 billion (US$128 million), subject to a maximum loan amount of each private residential mortgage of HK$10 million (US$1.3 million)
To insulate borrowers from interest-rate fluctuations under the scheme, the HKMC has obtained Hong Kong Monetary Authority’s agreement not to require mortgagees to undergo stress testing. However, the current debt-to-income ratio will still be applicable.
READ: Hong Kong saw lowest average salary increment in 10 years
Mortgages under the scheme have been offered through: Bank of China (Hong Kong), Chong Hing Bank, Dah Sing Bank, Industrial and Commercial Bank of China (Asia), Shanghai Commercial Bank, Standard Chartered Bank (Hong Kong) and The Bank of East Asia.
Hong Kong’s unemployment rate hit 6.4% in September from 3.7% in February this year, according to Moody’s Analytics.
