Valuer Insights
Trends in Hong Kong Residential Mortgages
April 24, 2025
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Angus Luk
Senior Director, Valuation & Advisory Services, Hong Kong
In February, the performance of residential mortgage numbers was impressive. According to the Hong Kong Monetary Authority's residential mortgage statistics, the number of new mortgage applications reached 6,542, marking a three-month high. Among that, the approved amount and number of new mortgage loans recorded were HK$17.593 billion and 3,657 respectively, both hitting an eight-month high.
As these figures reach new highs, the market is seeing "high mortgage ratio", "high loan amounts" and "long loan terms". In February, the average mortgage ratio was 63.2%, the highest in over 15 years (184 months); the average mortgage loan amount was HK$4.99 million, also the highest in 18 months; and the average repayment term was 324 months (27 years), reaching a ten-month high.
Among these figures, the rising trend in mortgage ratios is the most significant, likely due to the government's recent relaxation of mortgage ratios. In the Policy Address last October, it was announced that the mortgage ratio limit for all residential properties, regardless of value or whether they are owner-occupied, would be standardized at 70%. According to data from the mortgage referral agents, in the first three months of this year, 35% of clients applying for a 70% mortgage through the referral service, a substantial increase of 21% compared to the same period last year. Additionally, many buyers who purchased first-hand uncompleted properties a few years ago are now starting to come to the market, and these owners tend to choose higher mortgage ratios.
Generally, mortgage amounts tend to rise in sync with mortgage ratios. Furthermore, the relaxation of mortgage ratios for properties at any price has stimulated transactions in the upgrading market. Regarding "long terms," although the government suspended the "stress test" requirements last year, property prices remain challenging to afford, leading borrowers to prefer "longer terms" to make it easier to pass the bank's income assessment.
For example, if a loan amount of HK$5 million has a repayment term of 20 years and an interest rate of 3.5%, the monthly repayment would be about HK$28,998, which requires a minimum income of HK$57,996 per month (double the repayment amount) to successfully obtain the loan. If the repayment term is extended to 30 years, the minimum income requirement can be HK$44,904 (as the monthly repayment will be HK$22,452), which is reduced by 22.6% and becomes easier to meet.
According to data from the Land Registry, during the first 16 days of April, the total number of secondary residential transactions (including private and public housing) reached 2,490. Among these, cases priced between HK$3 million and HK$4 million accounted for 597, representing approximately 24%. This proportion increased by about 4.5% compared to the 19.5% recorded for the entire month of March and accounting for a staggering 90% of the 661 transactions in March, surpassing the 20% level and reaching an over 8.5 years high since August 2016.
This figure is even higher than the 565 transactions in January and 460 in February, indicating a strong upward trend in this price range. In the first 16 days of April transactions primarily reflected the market conditions of March. The significant surge in these figures reflect the impact of the announcement in the budget at the end of February, which raised the property value limit for a HK$100 stamp duty from HK$3 million to HK$4 million.
When buyers decide which loan terms will be better for the mortgage application of flat prices between HK$3 million and HK$4 million, limited budget buyers should pay attention to different repayment amounts on different tenors such as 20 years, 25 years, and 30 years.
It is important to note that if there are issues such as insufficient valuations or discrepancies in the bank's approval terms, buyers may need to supplement their funds at the time of loan approval. Therefore, potential buyers are advised to leave some room when borrowing, avoid over-leveraging, and set aside reserve funds for future contingencies.
“High mortgage ratio," "high loan amounts," and "long loan terms" are indicators of buyers' confidence in the residential market over the next 20 years. This kind of mortgage can be seen as a “vote” from each buyer to show confidence in the residential market's future prospects.
As these figures reach new highs, the market is seeing "high mortgage ratio", "high loan amounts" and "long loan terms". In February, the average mortgage ratio was 63.2%, the highest in over 15 years (184 months); the average mortgage loan amount was HK$4.99 million, also the highest in 18 months; and the average repayment term was 324 months (27 years), reaching a ten-month high.
Among these figures, the rising trend in mortgage ratios is the most significant, likely due to the government's recent relaxation of mortgage ratios. In the Policy Address last October, it was announced that the mortgage ratio limit for all residential properties, regardless of value or whether they are owner-occupied, would be standardized at 70%. According to data from the mortgage referral agents, in the first three months of this year, 35% of clients applying for a 70% mortgage through the referral service, a substantial increase of 21% compared to the same period last year. Additionally, many buyers who purchased first-hand uncompleted properties a few years ago are now starting to come to the market, and these owners tend to choose higher mortgage ratios.
Generally, mortgage amounts tend to rise in sync with mortgage ratios. Furthermore, the relaxation of mortgage ratios for properties at any price has stimulated transactions in the upgrading market. Regarding "long terms," although the government suspended the "stress test" requirements last year, property prices remain challenging to afford, leading borrowers to prefer "longer terms" to make it easier to pass the bank's income assessment.
For example, if a loan amount of HK$5 million has a repayment term of 20 years and an interest rate of 3.5%, the monthly repayment would be about HK$28,998, which requires a minimum income of HK$57,996 per month (double the repayment amount) to successfully obtain the loan. If the repayment term is extended to 30 years, the minimum income requirement can be HK$44,904 (as the monthly repayment will be HK$22,452), which is reduced by 22.6% and becomes easier to meet.
According to data from the Land Registry, during the first 16 days of April, the total number of secondary residential transactions (including private and public housing) reached 2,490. Among these, cases priced between HK$3 million and HK$4 million accounted for 597, representing approximately 24%. This proportion increased by about 4.5% compared to the 19.5% recorded for the entire month of March and accounting for a staggering 90% of the 661 transactions in March, surpassing the 20% level and reaching an over 8.5 years high since August 2016.
This figure is even higher than the 565 transactions in January and 460 in February, indicating a strong upward trend in this price range. In the first 16 days of April transactions primarily reflected the market conditions of March. The significant surge in these figures reflect the impact of the announcement in the budget at the end of February, which raised the property value limit for a HK$100 stamp duty from HK$3 million to HK$4 million.
When buyers decide which loan terms will be better for the mortgage application of flat prices between HK$3 million and HK$4 million, limited budget buyers should pay attention to different repayment amounts on different tenors such as 20 years, 25 years, and 30 years.
It is important to note that if there are issues such as insufficient valuations or discrepancies in the bank's approval terms, buyers may need to supplement their funds at the time of loan approval. Therefore, potential buyers are advised to leave some room when borrowing, avoid over-leveraging, and set aside reserve funds for future contingencies.
“High mortgage ratio," "high loan amounts," and "long loan terms" are indicators of buyers' confidence in the residential market over the next 20 years. This kind of mortgage can be seen as a “vote” from each buyer to show confidence in the residential market's future prospects.