Title: Chinese Government Lowers Mortgage Ratios to Boost Property Market, but Faces Criticism from Netizens
Date: July 8, 2023
The President of the Financial Management Authority, Yu Weiwen, announced a series of relaxations in the property market, including lowering mortgage ratios, during a press conference held on July 7. The aim of these measures is to encourage citizens to invest in the property market and boost the economy. However, these initiatives have faced criticism from netizens and experts alike.
The Hong Kong government first introduced counter-cyclical macro-prudential measures, known as “property market hot tricks,” in 2009. This marks the first time that restrictions on these tactics have been loosened. Under the new regulations, properties for self-occupiers with a price of less than 15 million yuan can now apply for a 70% mortgage from the bank, while larger units will be eligible for a 60% mortgage. Properties worth 30 million or more will still have a maximum mortgage ratio of 50%. The loan-to-value (LTV) ceiling for non-self-occupied residential properties remains unchanged at 50%.
Additionally, the maximum LTV ratio for non-residential property mortgages has been increased from 50% to 60%.
Yu Weiwen explained that the decision to relax restrictions was influenced by the economy’s significant inflationary pressure and the potential impact of the United States‘ economic situation on Hong Kong. He emphasized that the authorities will continue to closely monitor the property market and make further adjustments if necessary, whether in terms of tightening or relaxing regulations.
However, many netizens have expressed concerns and dissatisfaction with the government’s measures. They argue that the current economy is poor, property prices are falling, and interest rates are high, making negative equity more likely for buyers. Some netizens claim that the government’s actions are more beneficial to property owners looking to cash out rather than strengthening purchasing power.
The founder of Centaline Real Estate, Shi Yongqing, also expressed a lack of optimism regarding the Hong Kong property market, stating that the “bull market will not return,” especially considering the underperformance of several pillars supporting Hong Kong’s economy and the impact of China’s economic downturn.
Meanwhile, the restrictions on Chinese websites setting up mirror sites remain in place, highlighting the ongoing efforts to control online information and censorship.
In response to the situation, the “Looking China” website has launched a recruitment drive for honorary members. This initiative aims to recruit 10,000 honorary members, each paying an annual subscription fee, to help break through censorship and provide independent and accurate information to mainland Chinese citizens, especially during times of crisis.
It remains to be seen how effective the relaxation of mortgage ratios and other measures will be in stimulating the property market and revitalizing the economy amidst the concerns and doubts expressed by netizens and experts.
Source: Watch China