HSBC raises mortgage rate, dealing a blow to Hong Kong homeowners, with other banks set to follow suit

Someone taking on a 30-year, HK$5 million mortgage at a rate of Hibor+1.3 per cent, will pay an extra HK$656 per month

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HSBC has taken the lead in raising mortgage rates as the cost of borrowing money keeps rising. Photo: Yik Yeung -man

Published: 6:58pm, 18 Aug 2022Updated: 9:10pm, 18 Aug 2022

HSBC has taken the lead in raising mortgage rates as the cost of borrowing money keeps rising, dealing a blow to Hong Kong homeowners and potential buyers.

The move is expected to prompt other major banks in the city to follow suit.

HSBC raised the cap for its Hibor-linked home loans to 2.75 per cent from 2.5 per cent for new applications, it said on Thursday. Hibor (the Hong Kong interbank offered rate) is the interest rate banks charge each other for borrowing money.

The one-month Hibor has soared to 1.9 per cent, the highest in more than two years.

HSBC’s move means someone taking on a HK$5 million (US$637,385) Hibor-linked mortgage over a 30-year period at a rate of Hibor+1.3 per cent, will pay an extra HK$656 per month, an increase of 3.3 per cent, according to Centaline Mortgage Broker.

“As the adjustment of the mortgage rate at such a leading bank is an indicator, other banks are expected to follow suit and increase the cap on their new Hibor-linked mortgages,” said Ivy Wong, managing director of Centaline Mortgage Broker.