Published:
Income-gearing ratio for potential homebuyers rocketed to 65%
How will banks be affected?
According to Moody's, the Hong Kong Monetary Authority’s (HKMA) half-yearly monetary and financial stability report, published in September, has stated that the income-gearing ratio for potential new home buyers had climbed to 65% in June 2013, and that property transaction volumes had contracted substantially.
These two developments are both credit negative for Hong Kong RMBS transactions.
"Hence, loan performances from new mortgagors are prone to deterioration, and delays in recoveries will impact defaulted loans of high loan-to-value (LTV) ratios," Moody's said.
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