Activity in residential mortgage loans remained strong in March, with new loans drawn down rising 39% to $13.1 billion, the highest since mid-1999.

The Monetary Authority's monthly survey of residential mortgage lending found new approvals in March were up 27% to $16 billion and in number terms by 29.1% to 10,377 cases. 

The growth was driven by the 48% increase in number of new approvals for secondary-market transactions and the 83.3% increase in refinancing loans, which more than offset the 11.7% decrease in primary market transactions. 

The number of new applications for mortgages was up 21%.

The proportion of new approvals priced at more than 2.5% below the best lending rate declined to 63.8% from 66.7% in February. 

However, the proportion of new approvals priced other than with reference to the best lending rate increased to 12.6% from 8% in February.

The outstanding amount of mortgage loans increased  0.4%, to $525.3 billion.

Mortgage portfolio quality improves

Improvement in the quality of the mortgage portfolio continues. The mortgage delinquency ratio and the rescheduled loan ratio dropped to 0.7% and 0.49% respectively from 0.79% and 0.51% in February. As a result, the combined ratio improved to 1.19% from 1.3%.

The authority's Deputy Chief Executive William Ryback said fixed-rate mortgages have become more popular in recent months in anticipation of interest rate increases.