Centaline Mortgage: Relaxation of mortgage policies structurally reduces demand; new mortgage insurance approvals in Hong Kong hit a new low in recent years in September.

Centaline Mortgage Managing Director Wong Mei-fung noted that the simultaneous decline in mortgage insurance figures in Hong Kong during the third quarter mainly reflected the property market entering a phase of periodic adjustment in mid-year, coupled with the full relaxation of mortgage policies and a rising proportion of non-mortgage-insurance users (such as investors) entering the market. This led to a structural reduction in the market's overall reliance on and demand for high loan-to-value (LTV) mortgage insurance. Under these factors, mortgage insurance figures recorded an overall decline in the third quarter. According to the latest data released by the Hong Kong Mortgage Corporation, both new mortgage insurance approvals and new mortgage insurance drawdowns recorded declines in September. The number of new mortgage insurance approvals fell 8.2% month-on-month to 718 cases; the amount of new mortgage insurance approvals fell 7.2% month-on-month to HK$3.8 billion. Both the number and amount of new approvals in September hit new lows in recent years, marking 127-month (over ten and a half years) and 93-month (nearly eight years) lows respectively. During the same period, the number of new mortgage insurance drawdowns plunged 25.2% month-on-month to 413 cases; the drawdown amount fell 25.7% month-on-month to HK$2.3 billion; both the number and amount hit six-month lows. Wong Mei-fung said the over-25% decline in new drawdown cases in September was mainly because drawdown figures are records that largely occur after mortgage completion, reflecting relatively lagged market conditions. The decline mainly reflected the mid-year property market adjustment period, during which mortgage applications fell in tandem, differing significantly from the buoyant market levels in the first half of the year, hence the more pronounced drop. The average new mortgage insurance drawdown loan amount was approximately HK$5.58 million, down about HK$40,000 month-on-month (a decline of about 0.7%), of which primary properties accounted for 23% and secondary properties accounted for 77%. Cumulative data showed that in the first nine months of 2026, new mortgage insurance approvals totaled 9,707 cases, with an amount of HK$53.1 billion, down 22.3% and 14.8% respectively year-on-year. As for new mortgage insurance drawdowns in the first nine months, the number of new drawdowns totaled 4,433 cases, down 18.1% year-on-year, while the amount fell 11.2% year-on-year to HK$23.7 billion. Regarding the year-on-year decline in new mortgage insurance figures in the first nine months of 2026, Wong Mei-fung analyzed that since mortgage policies have been fully relaxed to 70% LTV, more buyers have chosen to enter the market with a down payment as low as 30% without going through mortgage insurance, reducing their reliance on high LTV mortgage insurance and causing a structural decline in mortgage insurance demand. Data showed that the latest mortgage insurance usage ratio in September (i.e., new mortgage insurance drawdowns as a proportion of total residential mortgage cases) was at a low level of 8.9%, the lowest in 81 months (nearly seven years) since 8.5% in October 2019, forming a stark contrast with the high of over 30% before the policy relaxation. In addition, as diversified customer sources return to the property market, the proportion of investors entering the market has rebounded, and such non-self-use properties are not eligible for high LTV mortgage insurance, which is also one of the key factors keeping mortgage insurance market penetration at a persistently low level.