The Hong Kong Monetary Authority said Friday that it had told the city's banks to reduce the ceiling on mortgages for residential properties by 10 percentage points, to 60% of the property's value for homes valued at $2.6 million or more.

The rule took effect immediately.

For residential properties valued at less than $2.6 million, the loan-to-value ratio limit will remain 70%, the central bank said.

"The lower [loan-to-value] ratio for high-end properties will be helpful to banks in the management of the credit risks in lending against such properties," said the authority's chief executive officer, Norman Chan.

The rule was announced amid sharp rises in the city's property prices, especially on high-end properties, due to a strong influx of capital and a buoyant financial market.

The central bank also said it has reminded banks "they should be prudent in conducting valuation of properties and in calculating borrowers' debt-servicing ratios."

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