Property market impact will be limited but little room left for price increases Hong Kong banks are expected to follow the lead of the United States Federal Reserve and raise their interest rates a further 25 basis points this week and some lenders' rates may go even higher. The Fed was widely tipped to introduce its 12th successive 25-basis point increase last night, bringing its benchmark rate to 4 per cent. Peter Wong Tong-shun, an executive director of HSBC, said local lenders would follow suit but the level of increase charged by some might be even higher than the Fed's. Mr Wong said some banks had lower prime rates than others at present and that they might be under pressure to introduce a higher increase. The prime lending rate of Hong Kong's big three deposit-takers - HSBC, Bank of China (HK) and Hang Seng Bank - stands at 7 per cent while other lenders charge 7.25 per cent. Mr Wong said HSBC would review its rate in a few days. He Guangbei, the vice-chairman and chief executive of Bank of China (HK), also expected that Hong Kong's banks would increase their interest rates and concurred with Mr Wong that higher rates would have an impact on the property market. 'Any interest-rate movement affects the property market. However, since Hong Kong's economy is still in good shape and provided that the US Fed funds rate peaks at 4.5 per cent, modest rates rises will not hurt the property market too much,' Mr Wong said. Mr He said that Hong Kong residential mortgages had already shrunk because of a combination of factors and he added that he did not expect there would be much room for property prices to climb higher following the latest rate increase. Mr Wong and Mr He were speaking at a Hong Kong Association of Banks annual visit to Beijing yesterday where they met Vice-Premier Huang Ju. Delegates said Mr Huang was optimistic about China's economy, predicting 8 per cent gross domestic product growth next year.