Bank of China (HK), Bank of East Asia and Citibank launch new loan offers At least three banks matched HSBC by launching new mortgage offers yesterday, one day after the city's largest lender cut its mortgage rate, a sign of intensified competition in the home loan market. Bank of China (Hong Kong) cut its mortgage rate by between 0.1 and 0.15 percentage point to 2.9 percentage points below its prime rate, or 4.85 per cent in real terms to defend its market share and capture new business. Bank of East Asia launched a new mortgage plan at 3.15 percentage points below its prime rate, or 4.85 per cent. Citibank offered a mortgage rate as low as 4.9 per cent to entice customers. The prime lending rates of HSBC, Hang Seng Bank and BOCHK is 7.75 per cent while others stand at 8 per cent. BOCHK and BEA also offer cash rebates of up to 0.8 per cent and 0.9 per cent respectively for homebuyers with loan amounts of HK$500,000 or above. The new mortgage offers launched by BEA will run until the end of next month and those by BOCHK until the end of May. 'We want to maintain our competitiveness,' said Kenneth Tsin Wai-lun, BEA's senior manager at the marketing and distribution of property loans department. Sunny Cheung Yiu-tong, head of consumer banking at DBS Bank (Hong Kong), expected more lenders would adjust their mortgage offers next week. 'Most banks' mortgage rate will match with each other after the move of HSBC,' he said. HSBC cut its mortgage rate by 0.13 percentage point, offering home loans at 4.87 per cent, or 2.88 percentage points below its prime rate, on Thursday, as it sought to regain market share in a property sector starting to pick up. Mr Cheung said DBS would likely match the market, although there was not much room for lenders to cut mortgage rates to a large extent as funding costs had increased. DBS has launched a promotional offer for Sino Group's Vision City, with a mortgage rate at 4 per cent below prime, or 4 per cent in real terms, for the first year, and 3.15 percentage points below prime, or 4.85 per cent, thereafter. Peggy Tam Lai-king, the head of secured lending at Hang Seng Bank, said Hang Seng would update its mortgage offers on Monday. She said lenders responded to the move by HSBC so quickly not only because they wanted to maintain their market share, but also to capture coming business opportunities. 'It is expected there will be more property transactions in March and April,' she added. However, new housing loan approvals decreased by 6.4 per cent last month compared with December to HK$12.5 billion after a 14.9 per cent month-on-month decline in December. Market watchers attributed the fall to a drop in new property sites for sale last month and New Year seasonal factors. New mortgage loan approvals for the primary market decreased 45 per cent month on month last month and for refinancing by 10 per cent even as approvals for the secondary market increased by 18.9 per cent, the Hong Kong Monetary Authority's latest figure showed.
