HK raises red flag on bank risks from high loan-to-value mortgages

Hong Kong

HONG KONG'S de facto central bank expressed concern about the riskiness of mortgages with high loan-to-value (LTV) ratios issued by the territory's property developers, and said it may ask banks to take additional steps to manage their exposure to the sector.

"The accumulation of these high LTV mortgages may change the risk profiles of these property developers to which banks may have exposures," said Raymond Chan, executive director for banking supervision at the Hong Kong Monetary Authority (HKMA). "The HKMA will continue to monitor the situation closely and consider whether there is a need for banks to strengthen their risk management in respect of their lending to property developers."