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The Housing Authority will reduce its loan recipients' monthly repayment by half for a maximum period of 12 months to help tide them over short-term financial difficulties.
The authority's Subsidised Housing Committee Chairman Ng Shui-lai said the new relief measure will enable borrowers in financial difficulties to sustain their loan repayments.
Without those measures, these loans might either run into delinquency or default, Mr Ng added.
Win-win situation for all parties
"The new package, though at a cost to the authority, represents a win-win situation for all involved parties, including the loan recipients, the authority, the Hong Kong Mortgage Corporation Limited and the participating banks," Mr Ng said.
However, the existing arrangement, which is restricted to the bank loan alone, could not adequately help relieve the short-term financial difficulties of some loan recipients, especially those who had opted for a relatively smaller bank loan.
"In view of the prevailing economic environment and the financial situation of the authority, we think that offering a comparable assistance to recipients of the authority loan in genuine need should be welcomed by the general public," he said.
The deferred repayment is to be recouped evenly over the rest of the loan term, he added. The measure would also run in parallel with existing relief measures the banks offer.
Agreement reached with HK Mortgage Corp
As over 90% of the authority loans have been sold to the Hong Kong Mortgage Corporation Limited, the authority sought its agreement to provide the new relief measures.
To target assistance to loan recipients in genuine financial difficulties, a set of criteria will be adopted when considering applications from recipients under the Home Purchase Loan Scheme and Home Assistance Loan Scheme the Authority administers.
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Banks' recommendation required
The authority will consider participating banks' recommendations regarding the borrowers' repayment capability when approving the applications for relief measures.
It will send letters to participating banks to inform them of the new relief measures' details.
Since the introduction of the first package of relief measures to loan recipients in May 2002, about 550 borrowers have had their loan repayment re-structured, by freezing the repayment of the principal of the bank loan, and/or extending the repayment period of the bank loan from 20 to 25 years.
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