Hong Kong Mortgage Applications Drop 39% Amid Rising Rates

October saw a significant 39 percent month-on-month decrease in Hong Kong mortgage applications, dropping to 5,359 cases due to climbing mortgage rates, as reported by the Hong Kong Monetary Authority.

The approved mortgage loans for the month also witnessed a 2.2 percent fall, amounting to HK$24.9 billion compared to September. However, loans for primary market transactions experienced a substantial increase of 75.4 percent, reaching HK$5.6 billion. Conversely, loans for second-hand homes underwent a 13.6 percent decline to HK$8 billion.

Refinancing loans also saw a decrease, with a 13.2 percent drop to HK$11.3 billion.

Despite the fluctuation in loans, the total outstanding value of mortgages in October rose slightly by 0.1 percent to HK$1.86 trillion, with the delinquency ratio remaining steady at 0.07 percent.

Interbank borrowing costs in Hong Kong fell for the first time in almost a month, with the mortgage-linked one-month Hong Kong interbank offered rate dipping 14 basis points to 5.517 percent.

Despite attempts by lenders to attract customer funds through higher time-deposit interest rates amidst escalating Hibor rates, Hong Kong dollar deposits fell by 0.4 percent. In contrast, foreign currency deposits increased by 0.4 percent, and the value of yuan deposits rose by 3.3 percent in October.

The Exchange Fund's total assets saw an increase of HK$68.2 billion, totaling HK$3.99 trillion by the end of October.

The government reported a cumulative deficit of HK$172.9 billion for the April-October period, even after considering the HK$66.6 billion proceeds from green bonds issuance. The fiscal reserves were at HK$661.9 billion.

In other financial news, the Insurance Authority reported a 32.9 percent drop to HK$15 billion in new business premiums from mainland visitors on a quarterly basis for the third quarter. Total gross premiums fell by 1 percent to HK$428.6 billion in the first three quarters of the year compared to the previous year.

HSBC Life reported nearly HK$30 billion in new business premiums for the first nine months of the year. 

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