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Hong Kong banking regulator 'concerned' about credit risks linked to aggressive mortgage lending 

June 21, 2016

Sandy Li, South China Morning Post

Hong Kong’s banking regulator has expressed concern over the ultra-accommodative financing schemes offered by some Hong Kong developers to entice home buyers, saying that it is studying whether controls are needed to help offset credit risk.

The Hong Kong Monetary Authority (HKMA) said it is monitoring the recent practises by developers, including financing schemes that provide prospective buyers with 80 per cent or more of a home’s purchase price to drum up sales.

“Such loans provided by some individual developers have been increasing in multiples over the past year,” HKMA Deputy Chief Executive Arthur Yuen Kwok-hang wrote in the authority’s official website on Monday.

“While property developers are outside our supervisory ambit, the fact that banks lend to property developers which, in turn, provide mortgages to homebuyers, indirectly increases the potential credit risk faced by banks,” Yuen wrote in the HKMA’s opinion blog InSight. Read more

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