There is constantly call for relaxation of the 70% guideline on residential mortgage lending. It is clear that the guideline is intended to limit the risk exposure of financial institutions to a maximum of 70% of the property value. The governing authority has no intention to restrict the amount that homebuyers can borrow. It is possible for financial institution to lend up to 90% of the value of the property with extra portion insured under the Mortgage Insurance Programme. In December 2002, the Hong Kong Mortgage Corporation conducted a survey on banks regarding the streamlined pricing arrangement (also known as “one-stop 90% mortgage service”) for mortgage loans covered under the Mortgage Insurance Programme. Banks in general supported the arrangement and some of them had subsequently announced mortgage packages on the “one-stop 90% mortgage service”. The arrangement help to promote the Mortgage Insurance Programme by making the effective cost of mortgage loans with insurance coverage more transparent to homebuyers.

A feature of the present market conditions is that some property developers are offering optional payment terms to homebuyers as part of their marketing strategy. In some cases, homebuyers are offered a significant cash rebate or other discounts on the contract price. Under such circumstances, the contract price may not provide a realistic basis for determination of the true value of the property.