(Published by South China Morning Post, 26 Mar 2008) Recently, as the global credit crisis continued to unfold, the two largest quasi-government mortgage companies in the United States, Fannie Mae and Freddie Mac, were again subjected to intense scrutiny. While several issues have been raised, one critical concern was whether their deteriorating financial health was a result of their expansion into mortgage products outside of their primary mission. Considered as government-sponsored enterprises or GSEs, Fannie Mae and Freddie Mac were created to operate in America’s secondary mortgage market to ensure that loan originators have sufficient funds to lend to homebuyers at low interest rates.
(Published by South China Morning Post, 21 Nov 2007) In my Concrete Analysis piece in April, I clearly underestimated the impact of the subprime mortgage meltdown and its effects on the broader credit markets. Estimates of the expected credit losses attributable to the subprime mortgage market have grown appreciably in recent months. A recent Goldman Sachs research note estimates the potential losses at US$400 billion, or three times the size of the savings and loan crisis in the United States in the 1980s. While the loss in absolute terms may not seem very large given the size of the US financial markets, the amount of leverage related to investors holding mortgage-backed securities should not be underestimated.
(Published by South China Morning Post, 22 Aug 2007) A year from now, this will be the year many will remember as when they expected another big global financial market adjustment following ‘Black Monday’ in 1987 and the Asian financial crisis in 1997. As with all such corrections, the adjustments have different roots and varying degrees of impact. The United States Federal Reserve on Friday last week surprised the market by reducing the rate at which it charges banks to borrow from it – the discount rate.
(Published by South China Morning Post, 30 May 2007) In August 2003, Hong Kong improved the personal data collection of consumer credit information by collecting positive credit data for all unsecured loans from banks and other financial institutions. In Hong Kong, positive credit data comprises all available and utilised credit lines from each consumer’s credit cards and unsecured personal loans.
(Published by South China Morning Post, 11 Apr 2007) Never have I received more e-mails or telephone calls about what has been going on in the sub-prime mortgage market in the United States than in the past month or so. Let me try to put things in simple English. First, what is sub-prime mortgage lending? Simply, it is the lending to borrowers who do not qualify for loans from traditional mortgage lenders, typically banks. In the US, the use of consumer credit bureaus is quite advanced and transparent.
(Published by South China Morning Post, 18 Jan 2006) With interest rates expected to stabilize, prices forecast to rise and a new index, the time is ripe to enter the property market Hong Kong’s equity and property markets have been buoyed by news from the United States Federal Reserve last month that future interest rate increases are likely to be muted. Since then, the Hang Seng index has risen more than 900 points (or more than 6 per cent) and several property analysts have predicted a faster rebound in property prices and an increase in transaction numbers this year. What does this mean for would-be Hong Kong homebuyers who have been sitting on the sidelines for the past several months? Your time has come, and good things come to those who wait.
(Published by South China Morning Post, 01 Jun 2005) Banks are increasingly offering these loans because they are secured by the HKMC, but there are more efficient alternatives Banks are introducing fixed-rate second mortgages in the market. This has nothing to do with Hong Kong Monetary Authority relaxing its guidelines and permitting banks to offer top-up second mortgages over the 70 per cent loan-to-value limit. Second mortgages have been a useful financing product available from most property developers to entice potential buyers of their flats. Now, second mortgages are being offered in the primary and secondary market by the Hong Kong Mortgage Corp (HKMC), a 100 per cent owned government company.