Banking giant HSBC recently released new standards for foreign investors buying second homes in New York City. The new standards relax the minimum down payment required from 40% to 30% for luxury Manhattan condos in all buildings that meet a specified set of criteria. Said criteria are designed to maximize the overall stability of the building. They require, among other things, that a building already be 90% full. Meanwhile down payment figures for American buyers have not changed. They range from 20% to 40% depending on the size of the loan. Loans below $2 million allow for just 20% down payments, while loans of $5 million require 40% up front.
There could be a few reasons why HSBC is doing this. The first is that it is finally feeling safe enough about the housing market in New York to start courting rich buyers more aggressively. As we've written, the Manhattan housing market has made a tremendous recovery since the 2008 industry crash. And any sign that lending institutions are feeling comfortable about the housing economy is great for the market in the future. But we've also covered the issue of foreign buyers reining in their expensive overseas investments as they wait for the economic crisis in Europe to play itself out. So it's possible that HSBC is trying to protect the assets they already have tied up in New York with bonus incentives for foreign buyers. The fact that they're only providing increased loan figures for the most stable buildings bears this theory out.
In any case, HSBC's official reasoning is that it wants to encourage new investments while the interest rates are at the historically low rates that they currently are. Interest rates for 5-year adjustable mortgages is at 3.375%, and 30-year fixed mortgages are at 5.25%. And its willingness to risk bigger loans is a clear sign it has faith in the market's continued growth. Which means its a good time to check out a condo for sale in Manhattan. We've written that inventory for luxury condos is down, but there are certain areas, like the Upper East Side, or East Harlem, where a good deal should be easy to find.