Bank of China’s Hong Kong unit cuts mortgage rate to lure buyers, offset concern of US rate hike
Bank cuts mortgage rate by 10 basis points, offering the cheapest home loan in the city
Bank of China’s Hong Kong unit said it has cut its mortgage rate by 10 basis points, offering the cheapest loan in the city to attract buyers and offset rising concern of a possible rate increase in the US.
Bank of China (Hong Kong) is offering mortgage rate of 140 basis points above the Hong Kong Interbank Offered Rate, or Hibor, for loans of at least HK$10 million.
The bank is offering a rate of 145 basis points above Hibor on loans of between HK$4 million and HK$5 million for new apartments, and the same rate on loans exceeding HK$8 million for second-hand property .
Based on a one-month interbank rate of 0.25 per cent on Tuesday, the effective rate will be reduced to 1.65 per cent per annum. Before the latest offer, Bank of China (Hong Kong) was offering 150 basis points above Hibor, in line with the market.
“The bank will review its mortgage loan terms regularly in a bid to enhance its competitiveness,” Bank of China (Hong Kong) said in reply to a query by the South China Morning Post. “The final decision on mortgage terms will be determined by the client’s conditions.”
HSBC followed suite on Tuesday by also offering mortgage rates 140 basis points above Hibor
Comments by US Federal Reserve officials last week raised concerns that an increase of interest rates could come as early as next month.
Such concerns have not deterred Hong Kong’s property buyers, as they respond to the aggressive sales pitch, discounts and enticements by developers.
More than 580 new apartments were sold in Hong Kong over the recent weekend, the busiest two-day period since April 2015, according to the city’s property agents.
Sun Hung Kai Properties, Hong Kong’s biggest developer, said it sold all of the 308 Grand Yoho units in Yuen Long during its Saturday launch, according to deputy managing director Victor Lui.
“A three-bedroom unit sold for HK$12 million, or HK$16,250 per square foot. It is the highest selling price being achieved in the project,” he said.
The developer offered a maximum discount of 18.25 per cent, plus a 30-month, interest-free loan of up to 92 per cent of the unit’s value to drum up sales.
It registered more than 16,700 potential buyers, the third highest ever for a Hong Kong development.
One Kai Tak phase one, the project near the city’s former airport earmarked for Hong Kong’s permanent residents only, has also attracted 5,000 potential buyers even as the units were offered at higher-than-expected prices. The average price for the first 110 units were HK$14,500 per square foot after factoring in a maximum of 15.5 per cent discounts.
Under the scheme, all units at One Kai Tai phase one are prohibited from resale to non-permanent residents for 30 years or before June, 2043.
Hong Kong Chief Executive Leung Chun-ying said “Hong Kong land for Hong Kong people” was introduced at a time when lots of buyers from outside Hong Kong were purchasing new flats in the city, which worsened the already acute housing problem.
“After this [policy], we have [cooling measures of] ‘double stamp duty’ . We can see from statistics that the ratio for non-Hongkongers to come to buy flats is rather low. So the ‘double stamp duty’ measure has already reached the policy target of excluding non-locals’ needs with a city-wide effect,” he said on Tuesday morning before the Executive Council meeting.