Sellers cut asking prices on homes as banks raise mortgage rates

Sellers cut prices by 10 per cent after HSBC and Standard Chartered put rates up for new buyers

PUBLISHED : Thursday, 14 March, 2013, 12:00am
UPDATED : Thursday, 14 March, 2013, 7:47am

Home sellers have cut their asking prices by as much as 10 per cent in response to higher mortgage rates for new applicants announced by HSBC and Standard Chartered Bank.

From today, HSBC's best lending rate for new home loans will rise to 2.85 to 3.15 per cent, from 2.6 to 2.9 per cent. Standard Chartered has also raised rates from today.

Centaline Property Agency said one owner had reduced the price for a 539 square foot flat at Ocean Shores in Tseung Kwan O to HK$4.5 million from HK$5 million. The owner of a 922 sqft flat in Taikoo Shing cut the price by 7 per cent to HK$13 million.

Wong Leung-sing, the head of research at Centaline, said: "Developers have to offer their projects at competitive prices in a bid to offset the negative impact of the rate rise."

Wong said he expected apartments costing HK$3 million to HK$4 million would suffer the most from the higher interest expenses buyers now faced. "These units cater for end users, who are very sensitive to mortgage rates and prices," he said.

Agents said the New Territories would become a battlefield among developers competing for buyers as more than 70 per cent of new homes available for pre-sale to June were located there.

Midland Realty estimated that 3,000 new units in 14 projects were in the sales pipeline for the second quarter, of which more than 2,000 were in the New Territories.

Lee Wee Liat, the head of property research at BNP Paribas Securities (Asia), said the increase in interest rates would not deter property-buying sentiment because this should be a one-off rather than a series of rate rises.

He expected another one-off rate rise of 0.25 percentage point in the next 12 months, while home prices would decline by about 5 per cent during the period.

Sharmaine Lau, the chief economic analyst at mortgage broker mReferral, said monthly mortgage payments would increase by HK$260 to HK$9,315 for a successful applicant for a 70 per cent home loan for a HK$3 million flat.

"It is a signal for interest rates heading for an up cycle," she said.

Sun Hung Kai Properties' deputy managing director Victor Lui Ting said: "Mortgage rates are still at historical low levels. I think the rise in mortgage rates will have a limited impact on the property market."