We submitted a paper to the Central Bank on the mortgage cap proposal they have put out for consultation. Our view is that apart from being a crude instrument that it doesn’t work, Hong Kong is being used as an ‘example’ when in fact they are the very example that demonstrates best that the policy is misguided.
As practitioners we think a far more nuanced approach with other solutions such as higher stress tests, a freeze on underwriting criteria and mortgage insurance should the lender wish to avail of it are better.