Hong Kong’s monetary authority calls for borrower caution on interest rates despite forecast of Fed cuts
- Borrowers should carefully assess risks as it remains uncertain when the Fed will cut rates, Hong Kong’s de facto central bank cautions
- Warning follows a surge in property transactions since the Hong Kong government scrapped a set of decade-old curbs on February 28
Hong Kong’s de facto central bank has cautioned potential borrowers to carefully assess interest-rate risks before buying property as it remains uncertain when the Fed will cut rates.
“Hong Kong dollar interbank rates might remain high for some time,” the HKMA statement said. “The public should carefully assess and manage the relevant risks when making property purchases, mortgages or other borrowing decisions.”
The warning follows a surge in property transactions since the Hong Kong government scrapped a set of decade-old curbs on February 28, withdrawing the stamp duty on home purchases for non-permanent residents and second-time homebuyers while also relaxing mortgage policies to allow buyers to borrow more.
The Fed might cut rates three times for a total of 75 basis points this year, according to the so-called dot plot released on Thursday after the Fed’s meeting. The dot plot records each Fed official’s projection for the central bank’s key short-term interest rate.
Despite this, the HKMA said, “the actual timing and the interest rate path thereafter remain uncertain” and “future interest-rate decisions will be dependent on incoming data, the evolving outlook and the balance of risks”.