The Mortgage Insurance Programme (MIP) was launched by the HKMC in March 1999 with a view to promoting home ownership in Hong Kong. It provides insurance coverage to Approved Sellers (i.e. the banks) for an amount of up to 30% of the value at Origination (Subject to the insurance eligibility criteria of different MIP products), enabling the banks to advance mortgage loans of up to 95% the property value. Through the use of mortgage insurance, the down payment requirement for potential homebuyers is effectively reduced without incurring additional risk to the banks. The Corporation hedges the exposure of the mortgage insurance by taking out reinsurance with Approved Reinsurers.

The MIP serves as a useful tool in assisting potential homebuyers to overcome the hurdle of coming up with a substantial down payment for the purchase of a property. From the banking industry perspective, the programme allows the banks to engage in higher LTV lending without incurring additional credit risk and jeopardising the stability of the banking system. In all, it creates a win-win situation for both homebuyers and banks. For year 2008 as a whole, the Corporation received a total of 21,477 applications with an aggregate mortgage loan amount of HK$50 billion. About 93% of MIP loans received are for secondary market properties, demonstrating that the MIP is particularly instrumental in promoting the liquidity of the secondary market. The volume of loans drawn down in 2008 amounted to HK$20.4 billion and the market penetration rate stood at 16%.

The Corporation has taken the following major steps in 2008 to further enhance the product features and public acceptance of the MIP:

In late 2008, a gap emerged in the local mortgage market as some banks were unwilling to lend above a LTV ratio of 60% for some homebuyers. In response to the market demand for the availability of high LTV mortgage financing, the Corporation launched an enhancement of the MIP in December 2008 to specifically cater for that financing gap. Under this enhancement, mortgage insurance is offered at above the LTV ratio of 60%, subject to a maximum LTV ratio of 90% and a maximum loan amount of HK$6 million. It provides banks with a greater degree of flexibility in conducting their mortgage business and thereby helps to lessen the impact of a credit crunch in the mortgage financing to potential homebuyers.

The Corporation has always kept participating banks closely informed of all new developments under the MIP and sought their feedback prior to launch. We have also proactively invited banks and other market players such as estate agents and referral companies to send their staff to attend seminars organised by the Corporation. These seminars serve the purpose of providing thorough training on product features and eligibility criteria so that the attendees are sufficiently equipped to expound the details of various MIP products to their customers.