Hong Kong financial chief, Joseph Yam said Thursday financial stability, in particular banking stability, was maintained in Hong Kong through the property market downturn.

In his latest article, Monetary Authority Chief Executive Joseph Yam said low interest rates, the 70 percent loan-to-value ratio, two-income households, a high savings rate, the high capital adequacy ratio of banks, and the Hong Kong Mortgage Corporation all helped Hong Kong's financial sector to remain resilient during the last property-market downturn from 1998 to 2003.

"We were quite lucky that US interest rates were on a declining trend over that five-year period," Yam said, adding the interest rate liberalization in Hong Kong, has produced a highly competitive environment in retail banking, leading to the fall of the mortgage rate, relative to the prime rate, by four percentage points.

He said the mortgage rate over the five-year period fell from 11.5 percent to 2.5 percent. Since the great majority of mortgages were on floating rather than fixed interest rates, this helped mortgagors tremendously.

Source: Xinhua