On 02 Aug 2024, the HKMA clarified that MIP loans for properties with waived owner occupancy requirements will remain subject to self-occupied property LTV and DSR limits under existing countercyclical measures, and mortgage terms must align with standard non-MIP rental property offerings without imposing undue hardship on borrowers.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 02 Aug 2024, the Hong Kong Monetary Authority (HKMA) issued a circular clarifying the regulatory treatment of Mortgage Insurance Programme (MIP) loans following HKMC Insurance Limited's (HKMCI) announcement to accept applications for waiver of the owner occupancy requirement from 8 August 2024.
Regulatory Treatment of Waived Owner Occupancy Properties
The HKMA confirmed that MIP loans for properties with waived owner occupancy (per HKMCI's waiver) must continue to comply with the maximum loan-to-value (LTV) ratio and debt servicing ratio (DSR) limits applicable to self-occupied residential properties under the HKMA's countercyclical macroprudential measures for property mortgage loans, effective 28 February 2024. This means such properties will not be subject to the 10-percentage-point lower LTV and DSR limits reserved for non-self-use properties valued at HK$30 million or below.
Mortgage Terms Guidance
The HKMA further specified that mortgage terms for MIP properties with waived owner occupancy must not be more restrictive than prevailing terms for non-MIP residential rental properties offered by the lending institution, nor should they cause undue hardship to the mortgage borrower. This guidance ensures alignment with the broader regulatory framework for non-self-use residential mortgages.
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