Mortgage receivables only .38% of developers' total asset base

In light of questions surrounding high-LTB mortgages.

It has been noted that over the past few months, one of the incentive schemes that developers in Hong Kong have offered to lure potential homebuyers is the high-LTV mortgage.

According to a research note from Barclays, unlike previous top-up second mortgages offered by developers, which only offer a top-up of 20-30% LTV on top of the bank’s 50-60% LTV, these latest offers offer a total LTV of 80-90%.

Since many of such offers are being made available by the developers’ own financing subsidiaries, potential homebuyers are not required to pass the usual income and stress tests that the HKMA requires for traditional mortgages.

Here's more from Barclays:

To get a sense of how prevalent high-LTV mortgages are, we have conducted a quick spot check of the amounts of mortgage loan receivables that are currently on the books of the seven Hong Kong developers that we cover.

As at June 2015, the mortgage loan receivables amounts ranged from zero for Hang Lung Properties to HK$4,278mn for Henderson Land.

As a group, the total mortgage receivables exposure came to HK$8.3bn. In the context of their total asset base of HK$2,194bn and shareholders’ funds of HK$1,467bn, these exposures are only 0.38% and 0.56%, respectively.