Editorial | Risk remains for Hong Kong borrowers despite decision to hold rate
- Borrowers should heed warning this is not the time to lightly undertake property purchases, mortgages or other decisions that weigh on financial security
Respite from the current rate-rise cycle does not mean businesses and borrowers may look forward to lower interest rates any time soon. Rather, they should heed the Hong Kong Monetary Authority’s prevailing warning, reiterated by its chief executive, Eddie Yue Wai-man, to continue to be careful of borrowing costs and their affordability when they apply for loans.
Yue was speaking after the US Federal Reserve kept its target rate unchanged – between 5.25 and 5.5 per cent – for the second time since rates began rising in March 2022.
The HKMA followed by holding its base rate unchanged at 5.75 per cent, and HSBC, the biggest among Hong Kong’s currency-issuing banks, kept its prime rate unchanged at 5.875 per cent, the first lender to follow the de facto central bank’s move.
But that was after seven lenders including HSBC, Bank of China (Hong Kong) and Standard Chartered raised their mortgage rates for new loans by 50 basis points this week.
In Washington, Fed chairman Jerome Powell warned, uncompromisingly, that he was prepared to raise rates further, even as the United States enters a politically sensitive period ahead of a presidential election next year. “We intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective.”