With the aim of promoting stability in the long-term development of residential mortgage lending business, the Monetary Authority of Macao (“AMCM”) has implemented since December 2010 the “Guideline on Residential Mortgage Loans”, under which the basic principles and standards for residential mortgage lending, such as loan-to-value (LTV) ratio, debt-servicing ratio, maximum loan maturity and the relevant risk management processes are established, and this guideline is also applicable to equitable mortgage loans on residential properties under construction Taking into account the recent growth of equitable mortgage loans, the increasing supply of uncompleted residential units in the near future and the higher risks associated with such loans than those of ordinary residential mortgages, after consultation with the Macao Association of Banks, the AMCM promulgated further supervisory measures for equitable mortgage loans granted for the purchase of residential properties under construction. That is, regardless of the value of properties, the maximum LTV ratio for equitable mortgage loans granted to Macao residents and non-Macao residents should not exceed 70% and 50% respectively. These tightening measures will come into effect on 21 April 2011and should be applied to all applications under review.
