Meridian: It is expected that the number of mortgage loans for Hong Kong properties will reach 6,500 this year, hitting a 5-year high.

Mr. Tsao Tak Ming, Vice President of Referral Mortgage Brokerage Services, stated that in recent years, the Hong Kong government has relaxed the loan-to-value ratios for new property purchases. This year, over 50% of buyers in new property projects opted for immediate payment, with some projects reaching as high as 90%. It is expected that the number of new property mortgages will challenge approximately 6500 cases this year, an increase of about 50% compared to last year and reaching a new high in the past five years. Regarding existing property mortgages, new projects continue to be offered at low prices, and the second-hand market is expected to remain stable in the second half of the year. It is estimated that there will be about 55,500 existing property mortgages for the whole year, a slight increase of about 10% compared to last year. He pointed out that the latest US Consumer Price Index (CPI) reported 2.4%, unemployment rate fell to 4.1%, and with the effective implementation of the USMCA agreement and the expiration of the tariff truce, inflation expectations may rise. It is expected that the Federal Reserve will maintain interest rates at the July meeting, waiting to see the trends in inflation and employment data. If the situation is manageable, there may be a first rate cut in the second half of the year. If US interest rates decline, Hong Kong rates will follow suit. Hong Kong banks may have the opportunity to lower their best lending rates by about 1/8 to 1/4 points, potentially returning to pre-hike levels and providing positive support for the property market. He stated that if interest rates fall in the second half of the year and property prices slightly increase, banks may maintain a positive stance on residential mortgages and may adjust their mortgage-related incentives to attract more mortgage business in the second half of the year. Additionally, with the gradual effects of the government's new property policies and talent schemes, an increase in market sentiment and confidence is expected to lead to steady growth in property transactions. It is predicted that there will be about 45,000 new residential mortgage cases this year, an increase of about 15% compared to last year, ending a three-year decline. He mentioned that Hong Kong banks have increased the lock-in period for new HIBOR mortgage plans three times, causing a decline in refinancing and record low conversion rates. Even though banks have slightly increased cash rebates for conversions in the first half of the year, property prices have not significantly risen, keeping banks cautious and not significantly incentivizing conversions. If banks reduce the lock-in period for HIBOR mortgages, there may be an increase in conversions. It is believed that the second half of the year will continue to be supported by owners looking to refinance for cash, delisting, "mortgage dump and keep," and developers offering high loan-to-value mortgages. It is estimated that there will be about 7,100 conversion cases this year, a slight decrease from last year. Regarding mortgage insurance, he noted that in October last year, the government relaxed the loan-to-value ratio limits, allowing users and investors to borrow up to 70% without mortgage insurance. This has led to a significant increase in cases during the first half of this year. Among the cases referred through mReferral Mortgage Brokerage Services in the first half of this year, 31% of customers applied for a 70% loan without mortgage insurance, compared to 15% in the same period last year, representing an increase of over 15%. The proportion is expected to remain high. With the decrease in demand for mortgage insurance, it is expected that the number of new cases will be around 6,500 this year, a decrease of about 30% compared to last year. Looking ahead to the second half of the year, the Hong Kong property market will continue to face various challenges, with developments depending on external and local economic factors. Positive factors may lead to a cautiously optimistic outlook for the property market in the second half of the year, but potential risks from the Hong Kong and global economic environments should still be monitored closely.