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    Mortgage

    The extremely high P+1 interest rate on nano-property mortgages scares buyers

    2024.07.02

    After the real estate market was "removed", although a small number of "cake customers" and mainland customers entered the market, the real estate market atmosphere was not as expected. After banks waited and watched for a period of time, their attitude became more cautious, and some banks were even more cautious than before the "removal". Grip harder." After banks slashed their cash rebates, some banks began to suspend mortgage collections for village houses and old buildings in May. In June, some large banks further tightened mortgage measures for nano-buildings, with the mortgage interest rate for some nano-buildings reaching P+1. %, the cap interest rate is as high as 6.875%, which is close to 7%, more than 2% higher than the 4.125% of ordinary residential mortgages.

    What is the concept of an interest rate of 6.875%? For example, if the purchase price of a property is NT$4 million and a 90% mortgage is obtained, that is, a loan of NT$3.6 million, the monthly payment will be NT$30.

    Both monthly payment and total interest increased significantly

    If the interest rate rises to 6.875%, the monthly payment will increase by 6,336 yuan, a substantial increase to 24,160 yuan, and the total interest will reach 5 million yuan, almost double the level of 4.125%. Banks have tightened mortgage loans for nano-buildings, and the interest rates are higher than those for ordinary houses. The reasons are actually traceable. Village houses, old buildings, and nano-buildings are all residential types with relatively low defensive capabilities. Currently, banks are very cautious in their mortgage lending attitude. In addition, when property prices have not improved, banks are naturally unwilling to take higher risks. To "drive away customers" by raising interest rates is actually a way for banks to protect themselves.

    In addition, the Hong Kong Monetary Authority's measure to increase the mortgage ceiling for uncompleted properties to 70% has been extended to buyers of uncompleted properties before the withdrawal of the mortgage. In fact, it also means that banks need to go further to bear risks for buyers who purchase uncompleted properties at high prices. After all, the risk of downward pressure on property prices still exists. The current valuation of these pre-construction properties is far from the original purchase price. It is understandable that some large banks should stay away from nano-buildings. Fortunately, there are only sporadic banks that are blocking nano-building mortgage applications with high interest rates. If nano-building owners are unwilling to cancel the order, they still have other bank options.

    Nano building calculation method

    For buyers of off-the-plan units with small areas, banks generally do not clearly define the definition of nano-buildings, which inevitably leads to confusion. Should they be measured in square feet or intervals? For example, if a 250-square-foot open-plan unit is considered a nano-building? Is a two-bedroom unit with less than 280 square feet considered a nano-building?

    As far as the author understands, generally properties with an area of less than 280 square feet may be considered nano-buildings. If there is a buyer who purchased a small unit earlier and is worried that the property will be regarded as a nano-building and it will be difficult to obtain a mortgage plan with a "normal" interest rate, the author recommends that he should find out the situation from different banks as early as possible, or find a mortgage transfer company. Use an agency to help you avoid losing your budget when applying for a mortgage.