With two offers out, lenders plot tactics amid expectations of greater demand
Competition in the tax loan market is likely to be hotter than last year despite salary tax changes boosting the pool of potential borrowers, bankers say.
So far, only two lenders have announced their offers - Bank of America (Asia) last week and Dah Sing Bank yesterday - with Wing Hang Bank's unsecured lending arm having also unveiled a special tax loan for customers transferring loan balances from other banks.
While the tax loan race that traditionally peaks in late November and stretches into late February has only just begun, some observers are already baffled by what they describe as highly aggressive pricings.
At 5.08 per cent, the lowest annualised percentage rate from Dah Sing - offered on loans of $400,000 or above - is only 67 basis points above the latest one-year Hong Kong interbank offered rate (Hibor).
Hilda Ng Kwok-yan, assistant general manager at key tax loan player Wing Hang Credit, said she was surprised by the 'interest rate depth' of Dah Sing's offer.
'We are expecting a more uncertain market this year because of the increase in funding costs since a year ago,' said Ms Ng.