Weakening property demand weighed on loan growth.
The volume of residential mortgage loans approved in December dropped 20.7% MoM to $23.5b in line with the ongoing housing downturn in Hong Kong, according to a government statement.
Mortgage loans financing primary market transactions decreased 25.2% to $6.5b whilst those financing secondary market transactions dropped 12.5% to $7.7b. Those for refinancing fell 23.3% to $9.3b.
Banks in the SAR have been trying to stem a slowdown in mortgages and home development loans amidst a persistent weakness in the housing market.
“Weakening property demand is likely to weigh on residential mortgages, and the expansion of 9.1% y-o-y as of October 2018 (versus 8.1% y-o-y a year ago) is likely to wane,” Fitch Solutions said in a report. “Loans headed towards residential property development remains at a weak rate of 2.7% YoY in September 2018, well below the highs of 24.8% YoY.”
The number of mortgage applications in December correspondingly fell 21.2% MoM to 7,435. The outstanding value of mortgage loans increased 0.4% MoM to stand at $1.31t.
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