HONG KONG (China Daily/ANN): The Hong Kong Monetary Authority relaxed loan rules for commercial real estate, a step intended to ease the pressure on businesses that have been adversely affected by the coronavirus pandemic.
The loan-to-value ratio cap for commercial properties was raised to 50 per cent from 40 per cent, effective Aug 20, the authority said on Wednesday (Aug 19). The previous limit on commercial property mortgage was lowered to 40 percent in 2013.
“With business confidence continuing to be affected by the Covid-19 pandemic and the rising geopolitical tensions, non-residential property markets are likely to remain under pressure, ” said Eddie Yue Wai-man, chief executive of the HKMA in a statement issued on Wednesday afternoon.
Yue said the Covid-19 outbreak has led to significant pressure on the Hong Kong economy. While the residential property market has remained firm, there have been major corrections in prices and transaction volumes of non-residential properties including offices, flatted factories and retail premises.
It is, therefore, appropriate to ease the mortgage measures for non-residential properties in the current environment, he added.
Yue added that the outlook for the Hong Kong economy and the property market remains highly uncertain and the HKMA would introduce appropriate measures when necessary to safeguard banking stability.
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