Mortgage rates raised for fifth time in a year
Hong Kong banks are raising mortgage rates for the fifth time since May last year to combat funding pressures, and the trend is likely to continue, analysts and bankers say.
Standard Chartered will raise its mortgage interest rate based on Hibor, the Hong Kong interbank offered rate, on May 31. DBS and HSBC lifted rates yesterday, after Bank of China Hong Kong did so on Friday.
This could be a turning point where mortgage owners will prefer to price their mortgages from the prime-lending rate rather than Hibor, said Sharmaine Lau, of mReferral Mortgage Brokerage Services.
Since 2008, Hibor-pegged mortgages have been popular with homebuyers after the rate dipped in line with falling interest rates.
Some mortgages are also priced against the prime-lending rate, a favoured retail benchmark for products like personal loans and tax loans.
The interest rate for a Hibor-based mortgage is around 1.9 to 2.19 per cent after the latest rises. Mortgage rates based on the prime-lending rate are around 2.0 to 2.15 per cent, said Lau.
Banks are raising Hibor-based mortgage rates, mostly because of funding pressure that started in March, said Jammy Chen, Standard Chartered Bank head of secured lending, north east Asia.
Banks now have to pay much more to borrow from the interbank market, and to attract Hong Kong dollar deposits from retail and corporate clients, he said. 'As Hibor and prime-based mortgages are getting closer and closer, banks might have to increase their prime-based mortgage rates as well.'
