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Thursday, July 21, 2016, 17:09

Mortgages shrink 30% in 2016

By Oswald Chan

HONG KONG - The amount of new mortgage loans drawn down in Hong Kong in 2016 will decrease 30 percent to HK$170 billion from a year ago, the number of such loans will plunge 20 percent to 73,446 in the same period, according to mReferral Mortgage Services.

"Whether the downward trend will continue depends on the interest rate movement in the coming two to three years, as well as whether the government will relax its property market-cooling measures," mReferral Mortgage Services Chief Economist Sharmaine Lau said at a Thursday press conference.

The mortgage loan service provider predicted local home prices will fall 10 percent this year as the real mortgage rate (nominal mortgage rate minus inflation rate) will be in negative territory for the seventh consecutive year, cushioning the cushion the fall of home prices.

"The inter-bank balances in Hong Kong amount to HK$290 billion, and Hibor rate stands at the low level of 2.4 percent, so that Hong Kong banks are unlikely to follow US interest rate hikes immediately and this will support home prices," Lau asserted.

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