Mortgage loans in Hong Kong dropped for three straight months in October, as lending transaction in banks become tighter due to economic slowdown and a freeze of global credit.
Figures from Hong Kong Monetary Authority (HKMA) showed Hong Kong banks approved about S$2.7 billion (HK$13.7 billion) of new mortgage loans in October, a 40 percent less of that in last year. Loans also dropped at 5.9 percent from September, said central bank yesterday.
Home prices in Hong Kong slumped at 22 percent from its peak season in March and people with outstanding mortgages increased to more than a double in Q3 of 2008. Last month’s collapse of Lehman Brothers deepened the current global credit situations, pushing HK’s interbank lending rate to its highest peak for almost a year.
“Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector,” said Citigroup Analysts Marco Sze and Tony Tsang in a report.
The output for mortgage lending could be worst due to the increasing unemployment rates. HSBC Holdings, the city’s biggest bank network, slashes 500 jobs in Asia this month, mostly in Hong Kong.
HKMA figure also showed that proportion of approved new loans is 2.5 percent below HSBC’s 5 percent best lending rate and about half of last month’s 51.7 percent, from 83.1 percent in September and 94 percent last year.
HK’s economy entered its first recession this month since the Sars outbreak in 2003. The economic crisis slowed down exports and trading, forcing HK’s government to lower its economic forecast.
GDP shrank 0.5 percent in Q3 from Q2, government said in November 14 forecast. The said decline was more than the average estimate of 0.2 percent fall in a survey from six economists. The number of home owners with negative equity were more than doubled in Q3 to HK$6 billion or 2,568 estimated ca
Negative equity loans remained at 98 percent, less than the 106,000 cases in June 2003, when HK’s economy was waiting for dreadful effect of Sars outbreak.
However, not all news are bad as last week’s Hong Kong home sale posted its fourth weekly gain as dropping of prices lured house hunters who previously rejected the HK’s property market.
The city’s biggest private apartment projects climbed to 44 percent from last week’s 39 percent. Home prices dropped to 22.4 percent since reaching its 10-year highest peak in March, showed Centaline figures.