Hong Kong Interest Rate Takes a Surprise Hit: P Plunges 0.25% in Shock Reversal of Rising Trend
Hong Kong Interest Rates: A Shift in Trends
Recent Developments in Hong Kong Interest Rates
HSBC and Bank of China Hong Kong announced a 0.25% reduction in the Hong Kong dollar prime rate.
The “interest cap” of H’s mortgage interest rate decreases with the best interest rate.
The Federal Reserve previously announced an interest rate cut of 0.5%.
Hong Kong Bank P Interest Rate Changes in September 2024
| Effective Date | Bank | Previous Rate | New Rate |
| — | — | — | — |
| September 20, 2024 | HSBC | 5.875% | 5.625% |
| September 23, 2024 | Bank of China | 5.875% | 5.625% |
| September 23, 2024 | Standard Chartered | 6.125% | 5.875% |
| September 20, 2024 | East Asia | 6.125% | 5.875% |
HSBC Cuts Hong Kong Dollar and US Dollar Savings Account Interest Rates
HSBC reduced the interest rate for Hong Kong dollar savings deposit accounts by 0.25% to 0.625%.
Depositers with a total wealth management value of HK$1 million and above will continue to receive an additional annual interest rate of 0.001%.
The interest rate offered by HSBC for US dollar savings accounts has also been reduced from 1.0% to 0.75% per annum.
Bank of China Hong Kong Adjusts Interest Rate on Hong Kong Dollar Current Savings Deposits
The interest rate on Hong Kong dollar current savings deposits will be adjusted from 0.875% to 0.625% per annum starting from September 23, 2024.
Lam Wai Hung, CEO of HSBC Hong Kong, Comments on the Interest Rate Cut
“Today’s decision to lower Hong Kong dollar interest rates mainly takes into account the US Federal Reserve’s decision to cut interest rates and the steady decline in Hong Kong interbank interest rates since the beginning of this year. After fully considering the macroeconomic environment and the trend of interest rates between Hong Kong banks, we believe that an interest rate cut is appropriate.”
Historical Context: HSBC’s Prime Rate Adjustments
| Date | Adjustment | New Rate |
| — | — | — |
| September 23, 2022 | +0.125% | 5.125% |
| November 4, 2022 | +0.25% | 5.375% |
| December 16, 2022 | +0.25% | 5.625% |
| May 5, 2023 | +0.125% | 5.75% |
| July 28, 2023 | +0.125% | 5.875% |
Meridian Mortgage: Market Confidence Will Gradually Recover
Cao Deming, senior vice president of Meridian Mortgage Referral, said that the market generally caps interest rates for P mortgage plans and H mortgage plans. With HSBC’s reduction of the prime interest rate (P) by 0.25%, property owners can save on interest costs immediately. Market confidence will gradually recover, which can promote the recovery of the economy and the mortgage market.
Impact on Mortgage Payments
Assuming a loan amount of 5 million yuan and a term of 30 years, the monthly payment will be reduced by 720 yuan.
The income requirement will be reduced by 1,440 yuan (3%) to 47,024 yuan.
Outlook: US Interest Rate Cuts and Hong Kong’s 1-Month Interbank Offered Rate (HIBOR)
The US Consumer Price Index (CPI) fell for 5 consecutive months to 2.5% in the latest August, reaching a new low since March 2021.
Progress has been made in bringing inflation back to the 2% target, and US employment growth has also picked up.
It is expected that the Federal Reserve will have the opportunity to cut interest rates by a total of 2% to 2.5% in the next year.
* As the US begins to cut interest rates, Hong Kong’s 1-month interbank offered rate (HIBOR) is expected to follow suit.