HONG KONG (Reuters) – At least two banks in Hong Kong have introduced relief measures for home mortgage borrowers hurt by the coronavirus outbreak, in a move analysts say could help lower foreclosures in an economy already in recession.
Bank of China (Hong Kong) <2388.HK> and Standard Chartered <2888.HK> have said mortgage customers may apply to pay only interest, and not principal, for up to six months, subject to an extension of another six months.
“This is an effort to relieve the pressure of making monthly repayments for the individual and commercial customers who are more severely affected by the novel coronavirus outbreak, including but not limited to those in retail, food and beverage, logistics, tourism, hospitality and entertainment industries,” Bank of China (Hong Kong) said in a statement.
Months of sometimes violent anti-government protests in Hong Kong last year plunged its economy into its first recession in a decade. Analysts predict a worse start to 2020 for the financial hub as travel curbs to fight the spread of the virus deal a further blow to tourism, retail and other business.
Hong Kong Airlines, the city’s No.2 carrier, has already flagged plans to slash 400 jobs and cut operations given weak travel demand due to the outbreak.
The impact on Hong Kong’s economy from the new epidemic could be worse than in 2003 when it was hit by another coronavirus, the Severe Acute Respiratory Syndrome (SARS), its financial secretary has warned, with unemployment set to rise.
The new coronavirus can be transmitted from person to person and has infected more than 40,000 and claimed over 1,000 lives in mainland China, exceeding the global toll of 800 during SARS. Hong Kong has confirmed 42 cases of coronavirus.
Against this backdrop, more banks are expected to follow suit with easing measures for mortgage borrowers to prevent 2003-like foreclosures, mReferral Mortgage Brokerage Services Senior Vice President Eric Tso said.
But property agents do not expect foreclosures in Hong Kong to exceed 2003 levels, when 5,700 were recorded, as the current loan ratio is much lower.
Data shows the mortgage delinquency ratio was 0.03% at end-December, with the estimated number of residential mortgage loans in negative equity at 128.
Private home prices in the city, one of the world’s most expensive, eased again in December and property agents expect the trend to continue in the next few months.
(Reporting by Clare Jim; Editing by Himani Sarkar)