Dao Heng Bank - the SAR's fourth-largest bank - has acknowledged the high interest rate environment has put pressure on its margins, but it will wait to see how rates move before lifting prime lending rates. Managing director Randolph Sullivan said high short-term interest rates were a temporary phenomenon arising from the Government's intervention in the markets. He said a substantial and rapid decline in short-term money market rates since Tuesday was a sign the market was regaining order, and had lifted some of the pressure on banks to raise prime rates. Overnight rates came down from a peak of 22 per cent on Tuesday to close at 4.5 per cent yesterday, dragging down the one-month rate to 9.75 per cent, the first time it has been in single digits in a month. The benchmark three-month rate also came down 175 basis points to 10.5 per cent, just half a percentage point above the prime lending rate of 10 per cent. Meanwhile, the bank has seen encouraging growth in its residential mortgage business after launching an application-by-phone facility called 'Mortgage Direct' in July last year. General manager Paul Wong said the facility brought about substantial savings in operating costs, part of which the bank would pass on to customers in the form of cash coupons and discounts in legal fees. He added the bank had built up a fixed-rate mortgage portfolio of about $900 million during the six-month pilot scheme.