Pressure on Hong Kong Banks: Impact of US Interest Rates on Mortgage Rates

Interest Rates in Hong Kong Under Pressure

Zhitong Finance Network 2023-11-27 16:30:50

According to Wang Meifeng, managing director of Centaline Mortgage, Hong Kong’s banking sector is facing pressure to raise interest rates as the one-month interbank interest rate related to housing mortgages has risen to 5.53%. This marks a new high in 16 years, with the last peak occurring on October 18, 2007 at 5.54%. The decision on whether to charge the best interest rate depends on US interest rates, with potential implications for Hong Kong banks.

Meifeng explained that if the US decides to raise interest rates, it could lead to an increase in Hong Kong banks’ offered rates and funding costs. However, in the short term, the interbank interest rate may fall back after seasonal factors have been accounted for. Despite this, the pressure on banks to raise interest rates remains, as the average one-month interest rate associated with mortgages is around 5%, higher than the current market rate of 4.125%.

Meifeng also noted that recent rises in interest rates have not significantly affected mortgage holders, as H mortgages are calculated based on the capped interest rate of P mortgages. Even with the one-month interest rate reaching 5.53%, the actual H mortgage rate is still being calculated based on the prime market cap rate of 4.125%. It remains to be seen how this will impact mortgage holders in the long run.

It is important to note that the content, data, and tools in this article do not constitute investment advice and are for informational purposes only. The stock market is risky, so caution should be exercised when making investment decisions.

Canntaline Wang Meifeng Mortgage: Hong Kong banks are still under pressure to raise interest rates. Whether to charge the best interest rate depends on US interest rates

Zhitong Finance Network 2023-11-27 16:30:50

Zhitong Finance APP learned on November 27, Wang Meifeng, managing director of Centaline Mortgage, said that Hong Kong’s one-month interbank interest rate related to housing mortgages rose to 5.53%, rising for 7 consecutive working days, the first in a month October 18, 2007 ( 5.54%), a new high in 16 years. If the US does not raise interest rates this year, Hong Kong banks are not expected to raise the prime interest rate (P); however, if the US still decides to raise interest rates in the future, the Hong Kong dollar offered rates and bank funding costs will also rise as a result. Banks still have the opportunity to raise the prime rate (P).

Wang Meifeng pointed out that due to factors such as year-end preparations and seasonal factors near the end of the year, the increase in demand for Hong Kong dollars caused the interbank interest rate to rise slightly higher than the US interest rate . In the short term, the Hong Kong dollar interbank interest rate will still be at a level of more than 5% higher than the US interest rate. In the short term, interest rates will fall back after the impact of the factors this.

Even without the influence of seasonal factors, Hong Kong dollar interest rates are close to the level of US interest rates. The one-month interest rate associated with mortgages is around 5% The average one-month Hong Kong dollar interest rate as of today in the fourth quarter of this year is 5% The mortgage interest rate is higher than the current market rate of around 4.125%, which reflects that the pressure on banks to raise interest rates has not been eased.

Wang Meifeng continued to point out that interest rates have been rising in recent days, and mortgage holders have not been significantly affected whether they use H mortgages or P mortgages, because H mortgages have reached the interest rate ‘to be capped, and H mortgages are now calculated based on the capped interest rate of P mortgages. Today’s one month interest rate rose to 5.53%, and the actual H mortgage rate is still being calculated based on the prime market cap rate of 4.125%.

Warning from the financial community: The content, data and tools in this article do not constitute any investment advice and are for information only and have no guiding role. The stock market is risky, so be careful when investing!

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