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The Premium Loan Insurance Scheme and the Microfinance Scheme

The following is issued on behalf of the Hong Kong Monetary Authority:

     The Hong Kong Mortgage Corporation Limited (HKMC) today (April 21) announced that its Board has approved the launch of the Premium Loan Insurance Scheme (PLIS) and the extension of and modifications to the Microfinance Scheme (MFS), in response to the requests made by the Financial Secretary in his 2015-16 Budget.

     To promote market circulation of subsidised housing, the PLIS will help owners of subsidised sale flats who are above 50 years of age to pay premium.

     The PLIS is a loan arrangement provided by banks, whilst the HKMC serves as an insurer providing insurance to the participating banks. Under the PLIS, eligible borrowers will be granted loans against their properties as security primarily for settling premium payment to the Hong Kong Housing Authority (HA), Hong Kong Housing Society (HS) and the Government. As long as the borrowers continue to own the properties, they are not required to repay the loan during their life time. After settling the premium payment, the borrowers will have greater flexibility in letting out or selling the properties in the open market. The maximum loan amount depends on several factors including the market value of the property, the number of borrowers, the age of the borrowers and the mortgage plan that the borrowers choose.

     The PLIS is intended to eventually cover all subsidised housing schemes of the HA, HS and the Government which involve the payment of a premium to remove alienation restrictions. It will initially cover at least the Home Ownership Scheme of the HA and the Flat-For-Sale Scheme of the HS and, subject to discussions with the relevant entities, may be expanded to cover other schemes in stages.

     The HKMC plans to launch the PLIS in the latter half of 2015. The key eligibility criteria, the indicative percentage of the maximum lump-sum loan amount to specified property value (SPV) at different entry age and the cost payable by the borrowers are set out at Annex A, Annex B and Annex C.

     In addition, the HKMC will extend the MFS for a further term of 3 years to June 28, 2018. The following enhancements to the MFS will come into effect on June 29, 2015:

(a) The aggregate lending amount cap of the MFS will be expanded by HK$100 million to HK$200 million;

(b) For borrowers who maintain satisfactory track record of repayment to their loans for at least two years, they may apply for further advance. The maximum loan amount, including any existing outstanding loan amount, will be increased to HK$600,000. The interest rate of the further advance will be charged at a concessionary interest rate of 8% per annum; and

(c) The maximum loan amount of a self-employment loan will be increased from HK$200,000 to HK$300,000, which is aligned with that of a micro business start-up loan under the MFS.

Ends/Tuesday, April 21, 2015
Issued at HKT 17:20


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