Hong Kong's biggest home lender, HSBC, yesterday scrapped all cash rebates on its mortgage loans and raised the interest rate from 2.75 per cent to 3 per cent. Subsidiary Hang Seng Bank matched the changes, which are effective from today, bringing the mortgage rates for both banks back into line with those charged by major rivals. Speaking at a Community Chest charity function yesterday at HSBC headquarters in Central, executive director Peter Wong Tung-shun said the latest rates adjustment reflected the fact the cost of conducting mortgage business was rising as funding costs on the wholesale money market increased in line with rising US interest rates. However, Mr Wong said that with the aggregate balance - the measure of liquid cash in the banking system - now steady at $3.8 billion, and interbank lending rates relatively stable, there was no pressure on HSBC to raise its prime lending rate again. After raising their prime lending rates by 25 basis points to 5.25 per cent on March 21, HSBC, Hang Seng and Bank of China left their prime rates unchanged when their rivals announced a second 25-point rise, to 5.5 per cent, last week. Bank of China, the second-largest home lender in Hong Kong, increased its mortgage rate on Tuesday to a new range of 2.75 per cent to 3 per cent, from an earlier range of 2.55 per cent to 2.75 per cent. However, it continues to offer a cash rebate - down from a range of 0.3 per cent to 0.7 per cent of the loan amount to a new range of 0.3 per cent to 0.6 per cent. The latest round of small increases in home-lending rates will leave mortgage repayments barely changed, but some analysts believe mortgage rates may be headed as high as 5 per cent by the end of the year. This would see typical monthly loan repayments increasing by up to one fifth from repayment levels at the start of the year.