Last week's mortgage offers are brightening prospects for cautious buyers Secondary home sales jumped 40per cent last week as interest rate cuts boosted a market that has been sluggish for eight months. Property agents said cautious home seekers were more willing to shop after HSBC announced a cut in its mortgage rate last Wednesday and other banks followed suit. The number of transactions increased to 169, mostly at the end of the week. This compared with 121 deals recorded in the week of February 13 to 19, according to Midland Realty. The transaction volume was back to an average weekly figure of 172 deals in 2004 and last year, it said. Midland Realty chief analyst Buggle Lau Ka-fai said: 'The banks' moves bring the mortgage rate to as low as 5 per cent from 5.5 per cent to 5.75 per cent. That stimulates some buyers' appetites. 'Homebuyers are looking to buy because they want to lock in these preferential offers.' Hong Kong's biggest bank last week announced a cut in home mortgage rates by a half percentage point to 2.75 per cent below prime - or 5 per cent in real terms - until the end of next month. Before the new package, the bank was offering loans at prime minus 2.25 per cent, with a rebate of 0.3 per cent of the principal. HSBC's best lending rate is 7.75 per cent - the same as that of subsidiary Hang Seng Bank but lower than the 8 per cent offered by all other lenders in Hong Kong. Bank of East Asia and Wing Lung Bank followed by offering customers preferential fixed mortgages rates for up to one year, while Dah Sing Bank offered a rate of up to 2.75 percentage points below prime, or 5.25 per cent, plus a rebate of up to 0.3 per cent. Ricacorp Properties managing director Ivan Ho said the cut in rates had boosted transactions in the secondary market. That was reflected in his agency's business rising 50 per cent over the weekend compared with the previous weekend. 'We reaped commissions of $3million over the weekend,' said Mr Ho. This compared with just $1 million over one weekend in January, when the market was in the doldrums. But transaction prices have not yet picked up, according to agents. Residential prices had fallen 3per cent to 8 per cent since the fourth quarter of last year and transactions fell to 5,456 in December, the lowest monthly sales volume last year. This compared with 16,280 last April. Last month, transactions rose slightly to 5,855. Agents said overall market sentiment would still depend on the interest rate trend. Mr Ho said prices would rebound if there were more signs to confirm that interest rates would peak shortly. The present cycle of rising interest rates is expected to continue, with two or three more increases in the United States forecast this year. Some developers were expected to launch new projects in the next two months, said Mr Ho. If developers achieved a good sales response that might further improve the overall buying sentiment, he said.