Hk's mortgage loans fall 40 per cent

Hong Kong mortgage loans fell for a third consecutive month in October as banks tightened lending amid recession...

Banks in Hong Kong approved some £1.2 billion of new mortgage loans last month - down 40 per cent year-on-year, according to the Hong Kong Monetary Authority (HKMA). Loans fell 5.9 per cent month-on-month.

Home prices in Hong Kong have neen in freefall, falling at least 22 per cent from their March peaks, according to Centaline Property Agency, and the number of people whose homes are worth less than their outstanding mortgages more than doubled in Q3.

Hong Kong interbank lending rate is currently at its highest level in a almost a year as a consequence of the global credit crunch.

"Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector," Citigroup analysts Tony Tsang and Marco Sze said in a report.

The outlook for mortgage lending is expected to worsen as unemployment rises. HSBC Holdings, which has the biggest bank network in the city, this month cut 500 jobs in Asia, with most them in Hong Kong.

The number of homeowners with apartments worth less than the mortgages they borrowed - negative equity - almost doubled in Q3 to an estimated 2,568 cases worth £500 million, the HKMA said.

Source: www.homesoverseas.co.uk