Hong Kong tightens mortgage lending to rein in property bubble

Hong Kong’s central bank has tightened mortgage lending after saying a third round of quantitative easing by the US Federal Reserve risks pushing up home prices that have already surpassed their 1997 peak.

The central bank is limiting the maximum term on all new mortgages to 30 years, Norman Chan, chief executive of the Hong Kong Monetary Authority (HKMA) said.

Mortgage payments for investment properties cannot be more than 40% of buyers’ monthly incomes, from the current 50% he said. The measures are the second set of curbs in as many weeks by the government of new CEO Leung Chun-ying, who is trying to rein in home prices that have gained more than 85% since early 2009.