Citibank has fired another salvo in the mortgage price war by offering a home loan which pays 9.5 per cent on savings kept in a 'call deposit account' linked to the mortgage account.
The interest rate on the mortgage loan will also be at prime, or 9.5 per cent, and the loan will also come with an up-front 4 per cent cash rebate.
In an innovative avoidance of the interest rate cap on savings accounts set by the Hong Kong Association of Banks (presently capped at 4.75 per cent), Citibank will maintain the linked savings' account in US dollars - thus escaping the association's regulated rate.
But to the account-holder this device will be irrelevant, since statements will be issued in Hong Kong dollars.
The phased deregulation of interest rate rules in the SAR anticipates the removal of caps on current and savings' accounts in the middle of next year.
Citibank country business manager Danny Liu said that the deposit-linked mortgage was the first of its kind in the local home-loan market and would cater to customers' long-term financial planning.
