If, as looks likely, fixed-rate mortgages become a reality in the SAR, the head of the Hong Kong Monetary Authority will be a happy man. Joseph Yam Chi-kwong has long preached the merits of home loans that carry a fixed rate of interest, claiming they benefit the property market and home owners alike. The economic turmoil of the past six months has now put his case beyond argument. High interest rates introduced to defend the peg have damaged the property market and placed great strain on those struggling to meet rising home loans. A lot of pain might have been avoided if buyers had been offered fixed-rate mortgages some years back, when the property market was buoyant. But, back then, they might have been averse to the idea of a home loan carrying an interest rate marginally higher than that of a variable-rate arrangement. Now, few householders take much persuading about the advantages of fixed rates, although such a move is by no means a panacea for all ills. Interest rate fluctuations have made many home buyers more open to the prospect of paying a small premium on their mortgages in return for the peace of mind of knowing that their loan repayments will not rise unexpectedly. Ironically, legislators worried that the setting up last summer of the Hong Kong Mortgage Corporation which buys mortgages from banks, securitises them and then sells the securities onward to investors - would fuel property prices and drive interest rates higher. But experience elsewhere has shown that, by taking mortgages off the banks' hands and freeing them to provide more home loans, similar clearing houses have increased the rate of home ownership while reducing interest rates. The Financial Secretary, Donald Tsang Yam-kuen, says a strong bond market would provide the fixed-rate mortgage scheme's crucial third leg, after the loans themselves and the Mortgage Corporation clearing house, and points to the boost the bond market would receive if legislation to amend the pending Mandatory Provident Fund gets a green light from Provisional Legislators tomorrow. Regulations are likely to require that at least 30 per cent of MPF assets be invested in Hong Kong-dollar instruments, and many of these retirement set-asides will go into bonds. By becoming the location for an Asian debt-market, Hong Kong's image as a leading equity-market centre would be complemented.