Will Hong Kong banks cut prime rates below record low of 5 per cent?
- HSBC says will not cut best lending rate from 5 per cent
- Other Hong Kong’s banks likely to hold the line, say analysts
Hong Kong banks are unlikely to follow the lead of the Hong Kong Monetary Authority (HKMA) and cut prime lending rates as they are already at record-low levels, said industry sources and banking analysts.
“It is hard to go any more further as the bank’s profitability is very thin already,” said Eric Tso Tak-ming, chief vice-president of mReferral Corporation, a mortgage consultancy.
History shows us that other Hong Kong lenders are likely to hold the line even after the Fed made two emergency rate cuts this month to counter the economic disruptions triggered by the coronavirus pandemic.
In the wake of the 2008 global financial crisis, the Fed lowered interest rates to zero and the HKMA cut its base rate to 0.5 per cent. Lenders in Hong Kong, however, kept their prime rates at between 5 per cent and 5.25 per cent.
In Hong Kong, a substantial part of home mortgages in the local banking industry are based on the prime rate, the rate that banks charge their best customers.