Hong Kong home prices seen falling by 5 per cent after 7 major lenders including HSBC, Standard Chartered set to increase mortgage rates

The effective mortgage rate for new loans from HSBC, Hang Seng, BOCHK, Standard Chartered and BEA will rise by 50 basis points on Monday

The higher mortgage rates will pressurise home prices to fall by 3 to 5 per cent in the next few months, property agents say

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View of residential buildings at old district on West Kowloon side, picture taken at Sky 100 in West Kowloon. Photo Sam Tsang

Published: 6:00am, 18 Sep 2023Updated: 9:25am, 18 Sep 2023

Hong Kong home prices are set to fall by about 5 per cent by the end of this year, analysts say, after seven major lenders, including the three note-issuing banks – HSBC, Standard Chartered Bank, and Bank of China (Hong Kong) – said they will raise their mortgage rates as early as Monday.

The trio, together with Hang Seng Bank and Bank of East Asia from will increase mortgage rates for new loan applications by 50 basis points on Monday, while Citibank will make a similar increase on Wednesday (September 20), the lenders’ spokesmen said in a reply to the Post’s inquiries.

The effective mortgage rate for new loans by these six lenders, which control 80 per cent of the mortgage market, will be increased from 3.625 per cent to 4.125 per cent. Existing home loans will not be affected.

The payment on a typical HK$5 million (US$643,000) mortgage over 30 years will increase by 6 per cent after the mortgage rate increases, or by HK$1,430 per month to HK$24,232, according to calculations made by mortgage broker mReferral.

China Construction Bank (Asia) went even further in increasing its mortgage rates for new loans. It plans a 1.5 percentage point rise starting Monday, from 3.625 per cent to 5.125 per cent, according to mReferral which was citing market sources. The Post’s calls to the lender, which has a 0.3 per cent share in Hong Kong’s mortgage market, went unanswered.

Pedestrians walk past a HSBC branch at Pedder Street, Central. Photo Yik Yeung-man

“The mortgage rate rise is going to further hit the already weak property market in Hong Kong. High borrowing costs will discourage people from buying new homes at the moment,” said Louis Chan Wing-kit, CEO of the residential division at Centaline Property Agency.