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Last updated: 11 September 2023  
Press Release 20 July 2022

Payment Arrangements for Property Transactions (PAPT)

The Hong Kong Association of Banks ("HKAB") today announces the provision of an alternative means of payments of funds under Payment Arrangements for Property Transactions ("PAPT") to enhance customer protection, with the strong support of the Hong Kong Monetary Authority ("HKMA").

The PAPT will cover refinancing cases for residential properties at this point, including car parking spaces in a residential building, which are generally speaking simpler. This would enable banks to observe how PAPT performs.

All HKAB member banks offering HKD mortgage loans for residential properties in Hong Kong should be ready to adopt PAPT before the end of the year. Customers seeking refinancing from banks would be provided with an option to adopt PAPT.

Under PAPT, the Refinancing Mortgage Institution ("RMI") will transfer the mortgage loan proceeds directly to the Original Mortgage Institution ("OMI") via the interbank payment system (Clearing House Automated Transfer System or "CHATS"), instead of transferring the same to law firms and held custody, followed by law firms' issuance of solicitor cheques to the OMI for redemption of customers' original mortgage loans. If the loan amount granted by the RMI is greater than the redemption amount, the RMI will credit the excess to the borrower's repayment account maintained with the RMI.

PAPT is part of the digital journey of the banking industry which aims to enhance customer protection by providing direct electronic bank-to-bank transfer of mortgage loan funds. HKAB has had discussions with a variety of stakeholders, including the HKMA, and a series of pilot refinancing transactions using PAPT has been completed smoothly by selected banks. As a result, the pilot arrangement is now expanded to all relevant member banks. The initiative would enhance protection of residential mortgage customers against any unforeseeable circumstances leading to customers' funds being frozen.


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