Chart of the Week: Hong Kong banks' mortgage lending to slow

Rising interest rates are to blame.

Other than bank lending to property developers, BMI Research expects mortgage lending, which expanded by 5.9% y-o-y in April, to also slow over the coming months due to rising interest rates in the territory, and also owing to the regulator's tightened measures as it attempts to cool the overheating housing market.

Here's more from BMI Research:

According to the HKMA circular on May 19, the regulator announced that the amount of loans allowed for residential property that are worth less than HKD10m (US$1.3m) in value was cut to 50% of their value for borrowers with outstanding mortgages (from 60% previously), while lending to homes exceeding HKD10m was also cut to 40% (from 50% previously).

In addition, lenders have to also allocate a larger risk weighting to new residential mortgages (25% from 15% previously) approved after the HKMA's announcement, which we expect to weigh lending.