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LCQ17: Income proofs for home mortgage loan applications

     Following is a question by the Hon Leung Yiu-chung and a written reply by the Acting Secretary for Financial Services and the Treasury, Ms Julia Leung, in the Legislative Council today (March 20):


     Recently, I have received complaints from Hong Kong permanent residents who are employed to work on the Mainland and receive salaries through mainland bank accounts.  They claimed that some banks in Hong Kong did not accept the account records of mainland banks as income proofs, and rejected their applications for home mortgage loans, rendering them unable to purchase homes.  These members of the public have been forced to rent and reside in private residential flats on a long-term basis, and the high rental expenses have imposed a heavy burden on their livelihood.  In this connection, will the Government inform this Council:

(a) whether it knows which banks in Hong Kong currently do not accept account records of non-Hong Kong banks as income proofs when dealing with home mortgage loan applications of Hong Kong permanent residents, the reasons why such banks have adopted such a practice, and if such banks accept other income proofs; if they do not, the reasons for that; and

(b) whether the Government will assist the aforesaid group of people in resolving the difficulties they encounter in applying for home mortgage loans; if it will, of the details; if not, the reasons for that?



(a) In order to assess borrowers' repayment ability in a prudent manner, banks must require borrowers to provide reliable and accurate income proofs.  Although the Hong Kong Monetary Authority (HKMA) has not specified the kind of income proof documents acceptable to banks, banks will generally ask for a documentary proof of pay advices issued by employers, bank payroll records, or tax demand notes.

     As regards whether banks will accept account records of banks outside Hong Kong as income proofs, it will depend on whether such records can reflect the income of the borrowers in an accurate and reliable manner.

(b) HKMA has ascertained from banks that they, in general, will accept account records issued by banks outside Hong Kong if those records can clearly show the payroll entries records.  Otherwise, banks will require mortgage applicants to provide additional proofs such as documentary proofs of the applicants' employment and pay advices issued by their employers, and consider each case based on its own merits.  Some banks may have additional requirements, such as requiring mortgage applicants to provide evidence showing that the salaries they earned on the Mainland will be remitted to Hong Kong monthly, so as to demonstrate that they will have sufficient funds to meet their expenses in Hong Kong as well as to repay their mortgage loans.

     If the income proofs do not meet banks' credit approval criteria, banks may reject such proofs provided by borrowers.  It is a necessary and prudent risk management measure for banks to review income proofs provided by borrowers.  This measure applies to loan applicants working in or outside Hong Kong.

Ends/Wednesday, March 20, 2013
Issued at HKT 15:40


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