Jingluo: It is expected that the number of mortgage applications for pre-sale flats in Hong Kong will reach 6,500 this year, setting a new five-year high

According to the Zhitong Finance APP, Cao Deming, Chief Vice President of Jingluo Mortgage Referral, stated that the Hong Kong government has relaxed the mortgage loan-to-value ratio for pre-sale properties in recent years. This year, over 50% of buyers of new pre-sale properties have chosen the immediate payment method, with some new developments having an immediate payment ratio as high as 90%. It is expected that the total number of pre-sale mortgages for the year may challenge approximately 6,500 cases, a significant increase of about 55% compared to last year's total of 4,186 cases, challenging a nearly five-year high. In terms of existing property mortgages, new developments continue to be launched at low prices, and the second-hand market is expected to remain stable in the second half of the year, with an estimated total of about 55,500 existing property mortgages for the year, a slight increase of about 10% compared to last year's total of 50,500 cases.

He pointed out that the latest U.S. Consumer Price Index (CPI) is reported at 2.4%, and the unemployment rate has fallen to 4.1%. With the implementation of the Inflation Reduction Act and the upcoming expiration of the tariff suspension period, inflation expectations may rise, and it is anticipated that the Federal Reserve will remain on hold at the July meeting. The Federal Reserve will review the trends in inflation and employment data, and if the situation is manageable, it may consider the first interest rate cut of the year in the second half. If U.S. interest rates decline, Hong Kong interbank rates will follow suit, and Hong Kong banks may also adjust their prime rates (P) based on interbank rate trends, various external factors, and their own strategies, with a potential reduction space of about 1/8 to 1/4 percentage point, which could bring rates back to levels before the rate hike cycle, providing positive support for the property market.

He stated that if interest rates fall in the second half of the year, coupled with a slight rebound in property prices, banks are likely to maintain a positive attitude towards residential mortgage business. It is not ruled out that they may adjust their mortgage-related offers based on their own conditions and company strategies to compete for mortgage business in the second half. Additionally, the effects of the government's latest mortgage policies and talent programs will gradually emerge, and with increased market sentiment and confidence, property market transactions are expected to rise steadily. It is anticipated that the residential mortgage market will return to positive growth this year, with the total number of new residential mortgage applications expected to be around 45,000 cases, an increase of nearly 15% compared to last year's total of 39,327 cases, ending three consecutive declines.

He mentioned that Hong Kong banks have raised the interest rate cap for the new H mortgage plan three times since September 2022, causing the refinancing market to shrink continuously, with last year's refinancing figures hitting a record low. Even though banks slightly increased cash rebates for refinancing in the first half of this year, property prices have not significantly rebounded, and bank valuations remain cautious, leading to no substantial increase in refinancing incentives. If banks lower the interest rate cap for H mortgages, it may increase homeowners' willingness to refinance. It is believed that in the second half of the year, support will continue to come from cash-out refinancing, name removals, "refinancing protection," and developers offering high loan-to-value refinancing with interest rate cuts. The total number of refinancing cases for the year is expected to be around 7,100, a slight decrease of about 5% compared to last year's total of 7,451 cases.

Regarding mortgage insurance, he stated that the October 2022 Policy Address relaxed the mortgage loan-to-value ratio limit, allowing both users and investors to borrow up to 70% of the mortgage without going through mortgage insurance. The new measures have led to a significant increase in applications for borrowing up to 70% of the mortgage without insurance in the first half of this year. Among the mortgage applications referred through Jingluo Mortgage in the first half of this year, clients applying for 70% mortgages (non-insured) accounted for 31% of the total applications, a substantial increase of over 16% compared to 15% in the same period last year. It is expected that the proportion of borrowing up to 70% will continue to remain high. With the demand for mortgage insurance decreasing, it is anticipated that future mortgage insurance numbers will remain low, with new mortgage insurance applications expected to be around 6,500, a decrease of about 30% compared to last year's total of 9,337 cases Looking ahead to the second half of the year, the Hong Kong property market still faces various challenges. The development of the property market will depend on external and Hong Kong political and economic factors. If favorable factors emerge, the mortgage market in the second half of the year will maintain a cautiously optimistic attitude, but potential risks brought by the Hong Kong and global economic environment still need to be monitored