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Application for Cross-city Housing Provident Fund Loan Allowed

The Ministry of Housing and Urban-Rural Development (MOHURD), Ministry of Finance and Central Bank have jointly issued the Circular on Raising the Utilisation Efficiency of Housing Provident Fund stating that as from 8 October 2015 cross-city provident fund loans will be made available. In cities with the right conditions, steps should be taken to advance personal housing provident fund loan securitisation.

According to the Circular, in designated cities where the utilisation rate of housing provident fund was lower than 85% as at the end of August 2015, efforts will have to be made to look into the local property price level, loan demand and repayment ability of borrowers, in a bid to raise the limit of personal housing provident fund loans. Under the premise of guaranteeing the basic living standard of the borrower, the ratio of the monthly repayment amount to the borrower’s monthly income should be capped at 50-60%. The loan repayment period can be extended to five years after the statutory retirement age of the borrower, with the longest maturity period set at 30 years. Action will also be taken to allow borrowers to make monthly transfer from the housing provident fund to repay principal plus interest of their loan.

Designated cities will take steps to coordinate the use of funds. The housing provident fund management centre and sub-centres in the same designated city should unify the policies for housing provident fund withdrawals and loans and coordinate the use of loan funds. Should there be a shortage of loan funds in the housing provident fund management centre or sub-centre, employees contributing to housing provident fund should be allowed to apply to other housing provident fund management organisations in the same city for loans.

The Circular put forward that the channels for raising loan funds should be broadened. Cities with the right conditions must actively advance the securitisation of personal housing provident fund loan, and revitalise the housing provident fund loan assets.

Moreover, cross-city housing loans will be offered. When contributing employees purchase homes in a place different to where they contribute to housing provident fund, they can, in accordance with the policy for personal housing provident fund loan in the place where the housing is bought, apply to the local housing provident fund management centre for personal housing loan. 

Contributing employees who apply for personal housing provident fund loan and agree to have their monthly income calculated according to their monthly contribution to the housing provident fund, are not required to present income proof issued by their employer. When contributing employees living in rented commodity housing apply for withdrawal of housing provident fund, they are only required to present their identification documents and proof of no property ownership (both self and spouse) and are not required to furnish any other proofs.

Content provided by Picture: HKTDC Research
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