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Following is a question by Dr Hon Lam Tai-fai and a written reply by the Secretary for Financial Services and the Treasury, Professor K C Chan, in the Legislative Council today (June 29):
Question:
It has been pointed out in the First Quarter Economic Report 2011 that the ratio of mortgage payment for residential properties to median income of households (repayment-income ratio) among members of the public has soared further from 45% in the fourth quarter of 2010 to around 49% in the first quarter of this year. It has been reported that the Financial Secretary has indicated that if banks raise interest rates of mortgage loans by 3% in the future, such ratio will rise to 63%. Regarding the daily living expenses among the general public and the impact of the banks raising interest rates on such expenses, will the Government inform this Council:
(a) of the repayment-income ratio among members of the public in the past three years;
(b) whether it has conducted any survey on the ratio of monthly housing rental expenses to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(c) whether it has conducted any survey on the ratio of monthly expenses on transportation to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(d) whether it has conducted any survey on the ratio of monthly expenses on education to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(e) whether it has conducted any survey on the ratio of monthly expenses on healthcare to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(f) whether it has conducted any survey on the respective ratio of monthly expenses on meals bought away from home and home-cooking to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(g) whether it has conducted any survey on the ratio of monthly expenses on daily necessities such as clothing and footwear, etc to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(h) whether it has conducted any survey on the ratio of monthly expenses on basic living necessities of families such as water, electricity and gas, etc to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that;
(i) whether it has conducted any survey on the ratio of monthly expenses on entertainment to income among the general public; if it has, of the figures in the past three years; if not, the reasons for that; and
(j) whether it has assessed the impact of the banks raising interest rates of mortgage loans on the aforesaid expenses which are related to the livelihood and needs of the people, and what corresponding measures the authorities have to improve people's livelihood?
Reply:
President,
My reply to the question raised by Dr Hon Lam Tai-fai is as follows:
(a) The repayment-income ratio (affordability ratio) from 2008 onwards according to information compiled by the Rating and Valuation Department is set out in Annex A.
(b) to (i) A Household Expenditure Survey is conducted by the Census and Statistics Department once every five years. The latest round was conducted in 2009/10. The Survey aims at collecting information on expenditure patterns of households for updating the expenditure weights of the Consumer Price Indices. Since the statistical information on the ratio of household expenditure to household income was not computed in the Survey, the ratios of monthly expenditures on commodities/services mentioned in questions (b) to (i) to income are not available.
The Household Expenditure Survey compiles the average monthly household expenditure on the commodities/services mentioned in questions (b) to (i). The relevant figures for 2004/05 and 2009/10 are set out in Annex B.
(j) The effects of an increase in interest rate on people's livelihood vary among different individuals. For people who need to repay mortgage loans, an interest rate hike will increase their repayment burden, and may entail adjustments to their expenditures on other items. Therefore, people should carefully assess their own capacity in dealing with interest rate changes before applying for mortgage loans. On the other hand, for people who have net savings in the form of bank deposits, an interest rate hike may raise their interest income.
Ends/Wednesday, June 29, 2011
Issued at HKT 14:41
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