by yeoproz
After reading this news article I feel that all the signs are pointing towards a huge bubble waiting to be burst. What do you guys think?
Banks don’t dare to lend to these segment of the market, so the developers set in to SELL and PROVIDE the LOAN at the same time to these consumers. And this can be up to 90% loan value of homes that cost over 1mil USD.
Highlights:
Penny Li, 35, a finance professional, ended up buying a smaller and more expensive new apartment as she could not get a mortgage for an old home in a better location that she had her eye on. With an initial deposit of as little as HK$1 million (US$127,404), she secured a 530 sq ft home that costs HK$9.4 million. The developer is providing 90 per cent of the mortgage. “If it were not for the extra loan offered by the developer, I could not have bought this home,” Li says.
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The average income of a fresh graduate in the city – will need to save up for 12 years for such a down payment without using a penny of their income
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Mortgage loans for new homes provided by banks inched up 1.5 per cent in 2018 to HK$84.9 billion. But the proportion of loans for new homes offered by non-banking financial companies, mainly cash-rich developers’ finance companies, jumped to 21.7 per cent of the total in 2018, up from 14.6 per cent in 2017. ———————-