The value of new housing loans drawn down in December fell 3.4% to $8.6 billion, reflecting a decline in new approvals in November.

However, in line with a 6.3% increase in new applications for mortgages in December, loans approved during the month rose by 5.9% to $8.6 billion.

The proportion of new approvals priced at more than 2% below the best lending rate fell to 92.8% from 93.8% in November while the proportion at more than 2.5% below the best lending rate edged down to 65.5% from 65.9%.

The outstanding amount of mortgage loans was little changed at $522.2 billion. 

The improvement in the quality of the mortgage portfolio continued, with the mortgage delinquency and rescheduled loan ratios dropping further, to 0.86% and 0.52%, respectively, from 0.97% and 0.54% in November. As a result, the combined ratio improved to 1.38% from 1.51%.

Mortgage portfolios' asset quality climbs

"It is encouraging to see continuing improvement in the asset quality of banks' mortgage portfolios in line with the pick-up in the economy," Monetary Authority Deputy Chief Executive William Ryback said.

"Banks should however remain vigilant for any potential risks, such as interest-rate risk, that may have an impact on the asset quality of the mortgage portfolio."