bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

DUTCH-based ABN-Amro Bank could be about to shake up the market by offering fixed-rate mortgage loans.

It previously caused a stir with its low mortgage rates.

  If launched, the new product will be the first of its kind in the territory, which is dominated by floating-rate mortgage loans.

The bank has been working on the new product for more than two months and will make a decision in three to four weeks.

 Although interest rates were heading down in the short term, the bank said the new product might attract home buyers believing inflation would remain at a high level.

 'There is market potential for fixed-rate mortgages as inflationary expectation is high,' Sergio Rial, the bank's chief executive in Hong Kong, said.

With inflation at 8 per cent, the room for downward adjustment of interest rates would be limited, he said.

The prime lending rate, on which the standard mortgage rate is based, is at 8.75 per cent. Mortgage rates are about 10.25 to 10.5 per cent, depending on the customer's relationship with the bank.

'Consumers should know that the current level of interest rates is one of the lowest for Hong Kong historically,' Mr Rial said.

It is understood the bank would limit the proportion of fixed-rate loans to about 5 per cent of its total mortgage portfolio.

The new product is expected to offer an alternative to consumers and give a competitive edge to the bank, which has been aggressively attacking the market since last year.

The bank was the first to break below the 10 per cent mortgage rate barrier in July last year.

The fixed rate will be offered for a set period of one or three years.

To fund the fixed-rate lending, Mr Rial said the bank was considering issuing fixed-rate debt papers.

'With our good credit ratings, we can issue fixed-rate papers.' The bank is ranked AA by Standard & Poor's and AA1 by Moody's Investors Service.

 The bank will hedge its fixed-rate exposure, which will incur extra cost. It is considering how to share the cost with customers.

Mortgage lending makes up 11 per cent of the bank's loan book.

Apart from launching new mortgage products, the bank has found a niche in the credit-card market which it is interested in tapping.

'If we launch credit cards, we want to do it on a regional level, attain a critical mass and centralise the processing,' Mr Rial said.

The bank recorded more than 50 per cent growth in gross profit last year.

The Hong Kong operation is the largest profit contributor in the region.

The bank said it had started a campaign to increase customers' deposits.

'We are probably today among the five most competitive foreign banks in terms of interest rates to capture deposits,' Mr Rial said.



ABN-Amro set to test market with new loans