The Mortgage Insurance Programme eligibility criteria in relation to self-employed borrowers and the debt-to-income ratio will be expanded.

The Mortgage Corporation has introduced the changes in response to a suggestion by banks to cover a wider group of homebuyers.

At present, self-employed borrowers who are not professionals are eligible to apply for coverage under the programme up to a maximum loan-to-value ratio of 85% and on completed properties only.

From today, the scope of eligibility for self-employed non-professionals will be expanded to cover loans with a maximum loan-to-value ratio up to 90%, while the maximum loan amount of $5 million remains unchanged. Also, such loans can cover properties under construction.

Ratio rises

The corporation is taking steps to provide a higher degree of underwriting flexibility under the programme with regard to the debt-to-income ratio.

To align with the prevailing banking practice of allowing certain higher-income mortgage borrowers with a debt-to-income ratio up to 60% permissible under the Monetary Authority guidelines, the corporation has decided to raise the ratio under the programme from 50% to 60%, so borrowers can procure a higher mortgage loan in their pursuit of home ownership.

The corporation's Chief Executive Officer James Lau said since the launch of the programme in 1999, active steps have been taken to enhance it to serve a broader group of homebuyers. Last year's introduction of 95% loan-to-value mortgage insurance, 85% loan-to-value cash-out refinancing and better mortgage terms for old-aged properties have been welcomed by banks and users.

He added the corporation will continue with further innovations for the programme this year, so the mortgage financing market can continue to deepen and grow in sophistication.