Banks scramble for mortgage customers
With almost all banks in the territory charging 9.25 per cent on mortgages, lenders are scrambling to find ways of attracting customers with a new supply of flats set to hit the market.
Estate agents and financial analysts agreed that Hong Kong banks were bullish about the territory's property market and that after a month or so of lagging sales, the market was expected to take off again.
Shih Wing-ching, managing director with Centaline Property Agency, said: 'The market recovered very quickly in September.' Hang Seng Bank and Standard Chartered Bank, traditional banks which had previously been slow to offer discount mortgage rates, had adopted a much more aggressive posture, property agents and banking analysts said.
'The packages [the big banks] were offering were not as attractive,' one analyst said, 'but now they have dropped their mortgage rate by a quarter or half a percentage point.' Walter Cheung, a spokesman for Hang Seng Bank, said: 'Our strategy is to compete on product services rather than on pricing.' Hang Seng Bank had cut its mortgage rate to as low as 9.25 per cent and was also offering improved services to the home-buying public, the official said.
The bank had introduced a 30-year mortgage versus the standard 25-year mortgage pay-back offered by all other banks, as well as a financial-planning service for hopeful flat owners.
It had also announced incentive plans that allowed people to borrow against their mortgage or the appreciating value of their flats and use the new loan for whatever purpose they wanted.
Mr W. K. Mok, the Hang Seng Bank's general manager, retail banking, said: 'We have reviewed our mortgage services with the aim of meeting different customers' needs.
'Our enhanced mortgage packages offer value-added benefits to customers, and these are only our initial step in providing more comprehensive financial services for home-buyers.' Standard Chartered, which adhered to the standard 10.25 mortgage rate during the 'mortgage war' earlier this year, had now also slashed its lending rate.
A spokesman for the bank said its standard lending rate was now 10 per cent but that its Excel and Priority Banking customers could take advantage of a 9.25 per cent rate.
A survey of other banks revealed that they were still offering deep discounts on mortgages, some as low as 8.75 per cent.
One analyst said: 'Banks now foresee that there are a lot of flats coming on to the market and they are positioning themselves so that the consumer will take a look at them.' Analysts said banks were still cash rich and eager to lend money to home-buyers.
But they are also concerned that the prime lending rate might be boosted by United States interest rate movements, forcing up domestic mortgage rates and dampening the property market.
The big question is whether the smaller local banks and the overseas banks which originated the 'mortgage war' will drop their rates further.
According to most banking analysts, that is unlikely.