FCR(1999-2000)9
For discussion
on 7 May 1999
ITEM FOR FINANCE COMMITTEE
LOAN FUND
HEAD 251 - HOUSING
Housing assistance for civil servants
Subhead 151 Housing loans
Members are invited to approve an increase in the approved commitment from $8,813 million by $1,625 million to $10,438 million.
PROBLEM
The balance of the approved commitment under Subhead 151 Housing loans is not sufficient to meet projected requirements in 1999-2000 and 2000-2001.
PROPOSAL
2. The Director of Accounting Services (DAS) proposes an increase in the approved commitment from $8,813 million by $1,625 million to $10,438 million.
JUSTIFICATION
3. Subhead 151 is for downpayment loans under the Home Financing Scheme (HFS) and the Home Purchase Scheme (HPS), and housing loans under the Housing Loan Scheme (HLS) made available to eligible civil servants. The provision of loans under these schemes was approved by Members at the time we introduced the schemes to assist eligible officers to acquire their own property.
4. Subhead 151 has an approved commitment of $8,813 million. The commitment level is measured against the net amount of outstanding loans, that is, the cumulative amount of loans approved less total loan repayments received. This reflects the Government's actual exposure on housing loans to civil servants. The Administration may only approve new loans to eligible civil servants under the three approved schemes with a sufficient balance in the approved commitment. As at 1 April 1999, the balance of the commitment was $530 million.
5. To meet projected requirements in 1999-2000 and 2000-2001, DAS estimates that an increase in the commitment of $1,625 million is required, as follows -
| 1999-2000
| 2000-2001
| Total
|
|---|
| Scheme
| Estimated number of new loans
| Estimated amount of new loans
$ million
| Estimated number of new loans
| Estimated amount of new loans
$ million
| Estimated number of new loans
| Estimated amount of new loans
$ million
|
|---|
| HPS
| 990
| 660
| 990
| 660
| 1 980
| 1,320
|
| HFS
| 1 010
| 1,299
| 1 010
| 1,299
| 2 020
| 2,598
|
| HLS
| 360
| 172
| 360
| 172
| 720
| 344
|
| Total
| 2 360
| 2,131
| 2 360
| 2,131
| 4 720
| 4,262 (a)
|
Less: Scheduled
loan repayment
| (1,008)
|
| (1,099)
|
| (2,107)(b)
|
| Balance of commitment as of 1 April 1999
|
|
| (530)(c)
|
| Increase in commitment required [(a) - (b) - (c)]
|
|
| 1,625
|
Detailed calculations are in the Enclosure.
FINANCIAL IMPLICATIONS
6. All loans granted under Subhead 151 are to be repaid with interest as set out in paragraph 10 below. The proposal will not give rise to any additional cost to the Government.
BACKGROUND INFORMATION
Downpayment loan
7. Eligible officers on or above Master Pay Scale (MPS) 34 or equivalent may join the HFS. Eligible officers between MPS 22 to 33 or equivalent and those below MPS 22 or equivalent but with 20 years' continuous service may apply to join the HPS. Under the HFS and HPS, pensionable officers and Model Scale I staff may apply for a downpayment loan subject to certain conditions. An HFS participant who is on the New Pension Scheme and who has at least ten years of pensionable service, may borrow up to the maximum commuted pension gratuity which he would have earned had he retired at the date of application for the loan. For HPS and other HFS participants, the loan ceiling is determined by their salary and the price of the property that they purchase, i.e. 30% of the price of the property or 24 months' salary, whichever is the lesser.
Housing loan
8. Eligible officers who have at least ten years of service and are qualified for a pension or an annual allowance may apply for a loan under the HLS up to the maximum commuted pension gratuity which they would have earned had they retired at the date of application for the loan. Officers appointed on or after 1 October 1990 are not eligible for this loan.
Security
9. Loans granted under the HPS, HFS or HLS are secured against the property concerned and/or the officer's pension.
Repayment of loan
10. All loans granted under these schemes are to be repaid with interest within ten years during the officer's service with the Government. As noted by Members in March 1999 vide FCR(98-99)81, the interest rate is at two percentage points below the average best lending rate of the note-issuing banks. Repayments of loans are credited back into Subhead 151 of the Loan Fund to meet expenditure on new housing loans for civil servants. Interest payments are credited as revenue to the Loan Fund.
11. The Finance Committee last approved an increase in commitment under Subhead 151 on 9 June 1995, raising the commitment from $6,690 million by $2,123 million to $8,813 million.
----------------------------------
Civil Service Bureau
April 1999
Enclosure to FCR(1999-2000)9
Loan Expenditure and Repayment
(a) Past Loan Expenditure
| 1996-97
| 1997-98
| 1998-99
|
|---|
| Number of loans
| Average amount
per loan
$ million
| Amount
of loans
$ million
| Number of loans
| Average amount
per loan
$ million
| Amount
of loans
$ million
| Number of loans
| Average amount
per loan
$ million
| Amount
of loans
$ million
|
|---|
| HPS
| 1 205
| 0.689
| 830
| 829
| 0.765
| 634
| 993
| 0.667
| 662
|
| HFS
| 1 142
| 1.221
| 1,395
| 766
| 1.499
| 1,148
| 1 060
| 1.286
| 1,363
|
| HLS
| 477
| 0.535
| 255
| 314
| 0.513
| 161
| 277
| 0.477
| 132
|
| Total
| 2 824
| -
| 2,480
| 1 909
| -
| 1,943
| 2 330
| -
| 2,157
|
(b) Estimated Expenditure
| 1999-2000
| 32000-2001
|
|---|
| 1Number of loans
| 2Average amount
per loan
$ million
| Amount of loans
$ million
| Number of loans
| Average amount
per loan
$ million
| Amount of loans
$ million
|
|---|
| HPS
| 990
| 0.667
| 660
| 990
| 0.667
| 660
|
| HFS
| 1 010
| 1.286
| 1,299
| 1 010
| 1.286
| 1,299
|
| HLS
| 360
| 0.477
| 172
| 360
| 0.477
| 172
|
| Total
| 2 360
| -
| 2,131
| 2 360
| -
| 2,131
|
(c) Estimated Loan Repayment
| 1996-97
$ million
| 1997-98
$ million
| 1998-99
$ million
| 41999-2000
$ million
| 42000-2001
$ million
|
|---|
| HPS
| 348
| 393
| 351
| 346
| 353
|
| HFS
| 509
| 621
| 588
| 577
| 653
|
| HLS
| 105
| 119
| 58
| 85
| 93
|
| Total
| 962
| 1,133
| 997
| 1,008
| 1,099
|
Legend :
HPS - Home Purchase Scheme
HFS - Home Financing Scheme
HLS - Housing Loan Scheme
Notes:
- Figures projected from the number of new scheme participants and the loan take-up rates in the past three years from 1996-97 to 1998-99.
[Not all joinees apply for loans when they first join the HPS or HFS.]
- The average amount per loan in 1999-2000 is taken as the same as that in 1998-99, on the basis that both the salary for civil servants and the property price are more or less the same as those in 1998-99.
- The number of new loans and average amount of a loan in 2000-2001 are assumed to be the same as those in 1999-2000 for estimates purpose.
- The estimated repayments for 1999-2000 and 2000-2001 are made on the basis of scheduled repayment of outstanding and new loans, as well as termination of loans fully repaid in the year.
