News Summary: HK frets Fed plan could spur bubble

AP News
Posted: Sep 14, 2012 11:24 AM

INVESTORS CHEER: The Fed's latest plan to spend billions on securities and keep interest rates near zero is being hailed by investors, but in Hong Kong, officials are worried about the local housing market overheating.

EXPENSIVE SPOT: Hong Kong is one of the most the world's least affordable places to live. House prices have nearly doubled since the start of 2009 because of low interest rates, easy credit, an influx of money from mainland China and limited supply.

DOLLAR LINK: Because Hong Kong's currency is pegged to the U.S. dollar, officials must follow U.S. monetary policy and can't raise interest rates to cool the property market. Instead, they have tightened requirements on mortgage borrowers and limited the length of loans to 30 years.