Mortgage broker sees 0.25 point rate rise this year
Mortgage rates offered by banks in Hong Kong will rise by as much as 0.25 percentage point this year, probably ahead of an increase in US interest rates, Howard Chu Ho-hwa, chief executive of mortgage broker mReferral, said.
The volume of home loans will continue to shrink this year, as the US may increase its rates sooner than expected, and the housing market is still plagued by successive government cooling measures, Chu said.
“Now the mortgage rate is prime rate minus 3.1 percentage points. It could change to prime minus 3 percentage points” and could reach prime minus 2.85 percentage points this year, he said.
In March, US Federal Reserve chairman Janet Yellen said the Fed would likely end its massive bond-buying programme this autumn and could start raising interest rates about six months later.
Of 320 clients the company interviewed at the beginning of the year, 98 per cent said they could afford an interest rate rise of as much as 50 per cent, Chu said.
He said total mortgage financing would continue to decline as homebuying demand was hit by austerity measures.
Figures from mReferral and the Hong Kong Monetary Authority show the value of new residential mortgage loans fell 17.3 per cent to HK$158.6 billion last year.
The company expects a drop of about 13 per cent to HK$138 billion this year.
“In the housing market, we see a further price decline of about 10 per cent this year. The primary market will continue to dominate sales transactions. We will see how we can co-operate with agents to do more business this year,” Chu said.
Established in 2000, mReferral, jointly owned by developer Cheung Kong and property agency Midland Holdings, is one of the major mortgage brokers in Hong Kong.
“We have served a total of 230,000 to 240,000 clients over the years, with accumulated loans referred by us of as much as HK$600 billion,” Chu said.