In March 2024, the statistics from the Hong Kong Monetary Authority (HKMA) on residential mortgages were released. The number of new mortgage loan applications was 8,622, an increase of 3,552 from the 5,070 in February, reaching a six-month high. Additionally, the amount and number of new mortgage loans approved in March were 190.51 billion Hong Kong dollars and 4,369, respectively. This showed a rise compared to February’s 179.46 billion Hong Kong dollars and 3,916 loans, with an increase of 11.05 billion Hong Kong dollars (6.2%) in amount and 453 loans (11.6%) in number. Moreover, the amount and number of new drawdown mortgage loans in March were 118.36 billion Hong Kong dollars and 2,611 loans, up from February by 4.36 billion Hong Kong dollars (3.8%) and 106 loans (4.2%).
Quarterly, the first quarter of 2024 saw a total of 581.01 billion Hong Kong dollars and 13,154 new mortgage loans approved, a decrease from the fourth quarter of the previous year which recorded 678.06 billion Hong Kong dollars and 14,137 loans. This represented a decline of 97.05 billion Hong Kong dollars (14.3%) and 983 loans (7%), setting a quarterly low not seen in nearly eight years. Furthermore, the amount and number of new drawdown mortgage loans in the first quarter were 392.9 billion Hong Kong dollars and 8,519 loans, down from the fourth quarter of the previous year by 94.3 billion Hong Kong dollars (19.4%) and 1,580 loans (15.6%). The amount reached its lowest in a quarter since 1997, 27 years ago, while the number of loans reached a quarterly low not observed since the first quarter of 2016, nearly eight years ago.
Cao Deming, the Deputy Chief Executive of Mortgage Referral at HKMA, stated that the comprehensive removal of property cooling measures at the end of February, along with the relaxation of mortgage policies, revitalized the property market. This led to a significant increase in both new mortgage loan applications and transaction volumes for both first-hand and second-hand properties in March. The effects of the cooling measures removal have not completely reflected in the mortgage data, indicating that there may still be room for a further increase in mortgage loan applications in the first half of the year.
In March, the amount and number of refinanced loans were 29.94 billion Hong Kong dollars and 627 loans respectively, showing a decrease of 0.72 billion Hong Kong dollars (2.3%) and 10 loans (1.6%) from the previous month. Both the amount and number have been declining for seven consecutive months, with the amount hitting a new low in nearly 10 years (121 months) and the number reaching a 15-year low (181 months). When compared with the fourth quarter of the previous year, the amount and number decreased by 149.06 billion Hong Kong dollars (60.7%) and 2,939 loans (57.6%) respectively. This marked the lowest amount since the first quarter of 2014, nearly a decade ago, and the lowest number of loans since the first quarter of 2009, nearly 15 years ago. Cao Deming pointed out that the current mortgage interest rates are relatively high, banks are still cautious in their property valuations, and recent reductions in cash rebates by banks have significantly reduced the incentives for refinancing. It is expected that the number of refinanced loans will remain at a low level for the year.
The mortgage ratio in March was 60.1%, a decrease of 0.2% compared to the previous month. The average repayment period remained at 326 months (27.2 years), with the average mortgage loan amount dropping by 220,000 Hong Kong dollars to 4.36 million Hong Kong dollars per month. Additionally, the utilization ratio of the H Plan decreased to 93.1%, a drop of 0.9% for the month. On the other hand, the utilization ratio of the P Plan increased by 0.5% to 2.5%, while the fixed-rate mortgage plan remained at 0%. Cao Deming mentioned that currently, the interest rates for the H Plan and P Plan are the same, and with the capped feature of the H Plan, if interest rates decline in the future, H Plan borrowers can save more on interest expenses. Moreover, with the market expecting a rate cut in the second half of the year, the H Plan is anticipated to remain the dominant mortgage plan in the market.