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Bank of China

Bank of China is one of the big four state-owned commercial banks of the People's Republic of China – the other three are Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China. Bank of China was founded in 1912 to replace the Government Bank of Imperial China, and is the oldest bank in China. From its establishment until 1942, it issued banknotes on behalf of the Government of the Republic of China along with the "Big Four" banks of the period: the Central Bank of China, Farmers Bank of China and Bank of Communications. Although it initially functioned as the Chinese central bank, in 1928 the Central Bank of China replaced it in that role. Subsequently, BOC became a purely commercial bank.

BusinessBanking & Finance
PROPERTY

Bank of China raises fixed rates for Hong Kong mortgages

Lender says new charges apply to those who upgrade homes and come amid rise in costs

PUBLISHED : Tuesday, 09 July, 2013, 12:00am
UPDATED : Tuesday, 09 July, 2013, 5:01am

The city's biggest mortgage lender, Bank of China (Hong Kong), has increased the rates for fixed-rate mortgages for those seeking to upgrade their homes.

The lender has from today raised its rate under the scheme to 2.65 per cent per annum from 2.4 per cent for borrowers opting to lock in their interest rate for the first five years of their loan.

Borrowers who choose to have a fixed rate for the first seven years will be charged 3.15 per cent, up from 3 per cent.

"Our costs have increased, so we are raising interest rates on fixed-rate schemes," said Chow Chak-chee, the bank's head of product management.

For customers who elect to fix their mortgages' interest rate for the first three years, the interest rate remains unchanged at 2.4 per cent. The rise comes after Standard Chartered Bank and Dah Sing Bank scrapped their fixed-rate mortgage offerings.

Dah Sing Bank said it stopped offering such mortgages because there was little take-up.

Fixed-rate mortgages are relatively unpopular with homebuyers compared with prime-rate-linked and Hibor-linked mortgage plans, BOCHK said, adding that less than 10 per cent of those taking out a bank loan to buy a home opted for such a mortgage.

To avoid a price war, the bank is not changing its prime-rate-linked mortgages, the most popular in the market, it added.

Sharmaine Lau Yuen-yuen, an analyst at mortgage broker mReferral, said expectations that interest rates would rise were growing. She added that interest rates on debt had already increased and that banks had to adjust their mortgage offerings.

The rate increase would affect market sentiment even though the monthly mortgage payment increase was not significant, Lau said.

"We already see buyers becoming more prudent," she added, noting that banks were wooing clients as property sales have slowed.

Meanwhile, Industrial and Commercial Bank of China (Asia) said yesterday it had adjusted its Hibor-linked mortgage rate, from Hibor plus 2.2 percentage points to Hibor plus 1.9 percentage points.

Overnight Hibor was fixed at 0.08286 per cent yesterday.

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