Tax loan rates set to hit historic lows
Cuts in bonuses this year expected to result in surge of applications
Hong Kong’s banks are expected to offer record low rates on tax loans this year, the result of higher demand from consumers, and cheaper than expected access to funding for the lenders themselves.
The expected rise in number of people applying is being attributed to companies not paying, or paying less in bonuses this year, a popular way for many to pay their tax.
Income tax in Hong Kong is paid retrospectively at the start of the calendar year, and it has become customary for banks to offer loans at accessible rates around then to borrowers, theoretically for the purpose of helping them pay their bills.
A number of banks have already announced their rates, and Rachel Lam, managing director at price comparison website Money Hero, expects rates to be at a historic lows this year, with competition for customers fiercer than ever.
We expect to see fierce competition over rates in the mid market category of people looking to borrow between HK$200,000 and HK$500,000
“Some have launched their tax loans earlier than usual, and we are seeing APRs (annual percentage rates) 0.2 or 0.3 percentage points lower than 2015.”