Hmmm, Where Have We Seen This Before? Hong Kong Welcomes 'Liar Loans'
Busy street market at Night. Hong Kong.

In today’s heavily-regulated US mortgage market, unscrupulous mortgage brokers are undoubtedly pining for the ‘good old days’ of 2005, when they could push so-called NINJA loans (no income, no jobs or assets) with abandon. Latino families, arguably the worst-hit ethnic group when the subprime implosion finally transpired, called these worthless mortgages “firma-fecha” loans, since the brokers only required them to apply a firma (signature) and fecha (date) to the loan application.

Homebuyers, it seems, appear to have short memories. On 17 September a Hong Kong property developer opened a 242-unit property in the Hung Hom neighborhood of Kowloon. How, you might ask, does a developer attract buyers in one of the world’s hottest property markets? In this case, through a minimum five percent deposit, and a 30-year mortgage with no requirement to verify income – the classic ‘liars loan’. The result? Over 40 percent of the properties were purchased in the first hour.

Current trends indicate that a substantial number of these buyers probably hail from mainland China. Amidst the ongoing collapse of their domestic equity market, Chinese investors have sought safety in foreign property – and the resultant flood of capital has buoyed the hopes of estate agents from New York to Hong Kong, and everywhere in between. CBRE, the global real estate group, estimates that Chinese outbound investment into foreign commercial property has maintained a compounded annual growth rate of 72 percent over the past four years.

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