Explainer | As Bank of East Asia joins Hong Kong lenders in providing mortgages for Greater Bay Area homes, here is what you need to know about the loans
- Bank of East Asia is among six Hong Kong lenders offering a cross-border mortgage loan service
- Chinese capital controls, exchange rate risks among factors that Hong Kong buyers must consider
Hong Kong banks expect more Hongkongers to seek out property in the Greater Bay Area development zone, and at least six of these now offer mortgages for such purchases.
On Tuesday, Bank of East Asia (BEA) became the latest lender to offer a cross-border mortgage loan service, following in the footsteps of Chong Hing Bank, which was the first to offer such loans in June last year; HSBC; ICBC (Asia), the Hong Kong unit of China’s largest bank; China Construction Bank (Asia); and Nanyang Commercial Bank.
Hong Kong residents accounted for less than 2 per cent of the residential transactions in the area in 2018, the total of which was an estimated 700 billion yuan (US$99 billion), according to CGS-CIMB Securities.
In February 2019, however, Beijing announced a blueprint for the development of the area, including measures that will create jobs and generate capital flows. This plan is expected to encourage more Hongkongers to work and live in the Greater Bay Area, where homes are cheaper than those in Hong Kong.
“Increased connectivity within the Greater Bay Area has also sparked a growing demand from individual customers for residential property in the region. With this in mind, Bank of East Asia is launching a cross-border mortgage service to help customers across the region buy a home in different locations for work, leisure or retirement,” said Adrian Li, the bank’s co-chief executive.
Previously, Hong Kong buyers could only apply to mainland Chinese banks for mortgages. They can now apply at the branches of the six banks in the city, but they might still need to go to mainland branches to complete some procedures. The can repay their mortgages in Hong Kong dollars.
