Hong Kong’s largest banks are likely to offer new mortgages to ease the burden on homebuyers amid elevated interest rates, but experts doubt that the trend would overcome the factors weighing down the struggling property market.
HSBC, one of the city’s three currency-issuing lenders, unveiled on Wednesday new mortgage plans offering a fixed rate of 3.18 per cent for the first three years, or 3.03 per cent for the first five years. In both cases, the rate for subsequent years is the prime interest rate minus 1.75 per cent.
The bank had offered fixed-rate plans at 3.25 per cent for three years or 3.15 per cent for five years starting in September.
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With the likes of New World Development (NWD) selling new flats at its State Pavilia project in North Point and Kerry Properties offering units in Hava in Yuen Long this month, the latest mortgages mean more options for homebuyers.
“Large banks may follow HSBC,” said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. In September, Bank of China (Hong Kong) and Standard Chartered launched similar plans after HSBC, he said.
Since then, however, the Hong Kong Monetary Authority cut base rates by a cumulative half a percentage point in November and December, in lockstep with the US Federal Reserve.
The city’s commercial banks have discretion over when to change their deposit and lending rates. HSBC’s prime rate is set at 5.25 per cent, same as that of subsidiary Hang Seng Bank. The rates at Standard Chartered, Bank of East Asia, Citigroup, CCB Asia and other banks stand at 5.5 per cent.
Competing mortgage plans in the market had rates 0.32 to 0.47 percentage points higher than HSBC’s latest offerings, Tso said.
For borrowers with a 30-year, HK$5 million (US$642,000) loan, the lowest available floating-rate mortgage plan is 3.5 per cent, or a monthly payment of HK$22,542 currently. The new HSBC schemes could save such buyers HK$883 or HK$1,291 a month during the first three or five years, mReferral said.
A model unit shows features of New World Development’s State Pavilia project in North Point. Photo: Handout alt=A model unit shows features of New World Development’s State Pavilia project in North Point. Photo: Handout>
“The new fixed-rate plan can reduce the risk of mortgage-rate fluctuations, which has a positive impact on home sales,” Tso said. “It can reduce the cost of home purchasing, so buyers can easily enter the market.”
