Any move by the Hong Kong Monetary Authority to intervene in the mortgage price war could have a negative impact on the banking industry, according to a senior Citibank executive.
Chan Tze-ching, the bank's country corporate officer, said banks had regulations to monitor the market, making any guidelines to cool the price war unnecessary.
'Self-regulating is much preferable,' Mr Chan said.
HKMA chief executive Joseph Yam Chi-kwong is considering whether to issue guidelines to banks in the wake of the heavy competition for mortgage business.
Competition has intensified in recent weeks, with some banks offering loans at 2 percentage points below the prime rate of 8.25 per cent.
The HKMA is concerned that any further downward adjustment would expose banks to higher risks, because the prospect for interbank rates staying at low levels remains uncertain and margins are again being squeezed.