Monetary Authority of Macao Special Administrative Region (SAR) issued on Tuesday "Guidelines on Residential Mortgage Loans" to banks, in an effort to ensure stable development of residential mortgage lending and sustainable development of real estate industry.

The Guidelines, which were established upon thorough consultation with the industry, set out several major standards for banks in Macao.

As for loan-to-value ratio, a maximum limit of 70 percent is set. However, for those properties with value less than or equal to 3.3 million patacas (412,500 U.S. dollars) purchased by Macao residents, a higher LTV ratio of up to 90 percent may be offered, subject to a maximum loan amount of 2.31 million patacas (288,750 U.S. dollars), according to the Guidelines.

Monetary Authority of Macao also sets a maximum limit of 50 percent for the ratio of monthly debt payment to monthly income of the borrower, while the maximum maturity for mortgage loans should not go beyond the retirement age of the borrower concerned.

In addition, the Guidelines require banks to have in place appropriate internal control measures for the business, including those for prevention of concentration risk, prudent property valuation methods and internal audit functions.

Monetary Authority of Macao says the Guidelines will become effective on Dec. 1, 2010. All mortgage loan applications received from that date onwards will be processed according to the aforementioned standards.