Mortgage rates - already at their lowest level in 30 years - are poised to tumble even further, breathing new life into Hong Kong's economy and property market, the chairman of the Hong Kong Association of Banks (HKAB), Peter Wong Tung-sing, predicted yesterday. Mr Wong, who is also general manager and chief executive of Standard Chartered Bank, commented after announcing a further 50 basis-point cut to the regulated maximum savings deposit rate paid to Hong Kong bank customers. The deposit rate cap - due to be scrapped on July 1 - closely tracks US interest rates. Yesterday's move at the routine weekly meeting of the HKAB was a widely-expected response to the 50 basis-point cut in the US fed funds to 4.5 per cent announced by US Federal reserve chairman Alan Greenspan on Wednesday. The HKAB meeting at which the rate cut was announced was marked by an angry protest directed by a 'Grand Alliance of the Poor' at the SAR Government and Hong Kong banks for plans to scrap the rate ceiling and new bank service charges. However, hard on the heels of the fourth cut to local savings rates so far this year - from 3.25 per cent to 2.75 per cent - a number of banks also announced 50 basis-point cuts to their prime lending rates, from 8 per cent to 7.5 per cent. Capturing the limelight, ABN Amro Bank also unveiled two new housing loan packages with low initial fixed rates - one offering a lending rate of just 2.75 per cent for the first year and 3.75 per cent for the second year. With many existing mortgage rates priced to float at up to 2.5 percentage points below prime, the latest move means home borrowers are now due to be charged just 5 per cent for their loans. This is less than half the rates they were paying about 24 months ago. While good news for customers and a move that would increase demand for loans and boost the economy, this meant that some banks were now placed in a 'very tight situation', Mr Wong said yesterday. Loans priced at 2.5 per cent below the new low prime rates were 'definitely not profitable', he said. But lower rates had already had a very positive effect on the Hong Kong stockmarket and for those with mortgages, he added. 'Reductions so far this year now total 2 per cent and we think there will be another half a percentage point making a total of 2.5 per cent,' Mr Wong said. 'Based on what we have seen in the US the sudden decrease in rates has had a very positive effect on the stockmarket and therefore improved sentiment.' Asked if the HKAB would cut rates again in May if the US announced a further reduction in its rates, Mr Wong said this would depend on how the interbank lending market reacted to the interest rate trend. 'If the interbank rate reacted in such a way that it has a corresponding decrease in magnitude, then another reduction will be likely,' he said. The target of about 50 angry placard-bearing protesters who gathered outside the HKAB offices on the fifth floor of the Prince's Building yesterday was the proposed scrapping of interest rate rules, and increases in bank charges. 'HSBC - anti-poor. Close your accounts now!' read some of the placards. The moves were a way of enriching the rich and impoverishing the poor, said organisers in a letter handed to bankers which appealed for the new charges to be cancelled. The alliance included representatives of Indonesian and Filipino migrant workers, the aged, those on welfare benefits and the labour movement. 'Together we are here to oppose the Government deregulation of interest rates, which has created this other policy of the banks introducing punitive charges towards poor and small depositors,' said a protest organiser. 'We deeply oppose this and feel that in a time of social and economic crisis they are turning penalties on to the urban poor.' On April 3, HSBC followed earlier moves by Standard Chartered Bank to introduce a minimum balance charge of HK$40 for every month in which the balance of a 'small' deposit fell to less than HK$5,000.