Buying a home is one of the biggest financial decisions for Hong Kong families. When approving mortgages, banks consider not only the property valuation but also the applicant's repayment ability.
Quick answer
The HKMA suspended the prescribed interest-rate stress-test requirement in February 2024. It did not remove mortgage affordability assessment: the regulatory DSR ceiling is currently 50%, the general LTV ceiling is 70%, and a bank may still use tighter internal underwriting. Buyers should therefore continue testing repayments at higher rates and lower household income.
Debt Servicing Ratio (DSR)
Since 16 October 2024, the HKMA's regulatory DSR limit has been standardised at 50% across residential and non-residential property mortgages. It no longer varies by self-occupation or existing mortgages. This is a ceiling, not an approval promise: banks may apply tighter underwriting based on income stability, credit history and other debts.
Stress Test
The HKMA suspended the interest-rate stress-testing requirement in February 2024. The old “rate plus two percentage points / 60% stressed DSR” description is therefore outdated. Banks still assess affordability, and buyers should independently model rate increases of one to three percentage points.
Suspension does not turn the 50% DSR into a recommended household budget. A buyer whose repayment is already close to half of recognised income may have little room for management fees, rates and government rent, repairs, insurance, family support or a period of lower bonus income. A useful personal check is to rerun the mortgage at one percentage point above the offered rate and with household income 10% lower.
Prime Rate (P) vs HIBOR
- P-rate: Based on the prime rate, usually quoted as prime minus a margin. More stable.
- H-rate: Based on the Hong Kong Interbank Offered Rate (HIBOR), with a cap rate. More volatile but generally cheaper than P-rate in recent years.
Down Payment and Loan-to-Value Ratio
Since 16 October 2024, the regulatory LTV cap has been standardised at 70%, regardless of residential property value, self-occupation or existing mortgages. If the bank valuation is below the purchase price, the buyer must fund the shortfall.
For example, a HK$8 million purchase with a HK$7.6 million bank valuation does not produce a HK$5.6 million loan at 70% of the purchase price. The regulatory starting point is HK$5.32 million—70% of the valuation—so the buyer must also cover the valuation gap in cash. Approval may still be lower after the bank reviews the borrower and property.
Mortgage Insurance
Borrowing above the general 70% regulatory cap may be possible through the Mortgage Insurance Programme, subject to the prevailing property-price, loan-amount, income, first-time-buyer and owner-occupation requirements. It is not automatic approval, and the premium increases the cash cost or the financed loan balance.
What the Bank Still Checks
Banks still review the valuation, credit record, other debt repayments, proof and stability of income, loan term and property type. Commission, bonus, self-employed or recently changed income may be recognised more conservatively. A co-borrower does not erase existing debts; the bank assesses the combined application under its underwriting policy.
Summary
Use the HK FinBox Mortgage Calculator to compare today's rate with rates one and two percentage points higher, then use the rent-versus-buy calculator on the same expected holding period. Add management fees, rates, government rent, maintenance, insurance and renovation reserves. The estimate does not represent bank approval.
If you already have a mortgage and cash available, use the Mortgage Prepayment Calculator to compare a shorter term with a lower monthly payment after deducting lender-confirmed penalties and fees.
Official sources
- HKMA: LTV cap and DSR limit from 16 October 2024
- HKMA Annual Report: suspension of the interest-rate stress test
Last checked 13 August 2026.