Hong Kong banks hike rates

Mort­gage move by cen­tral bank spurs in­ter­est in­creases

The National - News - Business - - Inside Track -

Some of Hong Kong’s largest com­mer­cial banks in the mort­gage loans mar­ket said they would raise in­ter­est rates fol­low­ing the lat­est round of mort­gage tight­en­ing mea­sures by the city’s de facto cen­tral bank.

Banks have to set aside more cap­i­tal when they lend after, at the week­end, the Hong Kong mon­e­tary au­thor­ity (HKMA) raised the risk-weighted floor by 10 per­cent­age points to 25 per cent for new res­i­den­tial mort­gage loans.

The HKMA also re­stricted the amount of loans some prop­erty buy­ers can get when it low­ered the loan to value ra­tio by 10 per­cent­age points, and trimmed the debt ser­vic­ing ra­tio.

Stan­dard Char­tered said the new mea­sures raised their busi­ness costs. “The new re­quire­ment on risk man­age­ment of new res­i­den­tial mort­gage loans has in­creased the cost of do­ing busi­ness,” it said. Stan­dard Char­tered and HSBC will both in­crease the in­ter­est rate on their mort­gages linked to the Hong Kong in­ter­bank of­fered rates, or Hibor, by 10 ba­sis points to Hibor + 1.4 per cent, ef­fec­tive from to­day. “We will con­tinue to work within the en­hanced reg­u­la­tory guide­lines to en­sure that our mort­gage lend­ing con­tin­ues to be pru­dently man­aged,” HSBC said. Bank of China Hong Kong will also raise its Hibor-linked mort­gage in­ter­est rate by the same de­gree to Hibor + 1.4 per cent, and in­crease in­ter­est rate on mort­gages linked to the prime rate, ef­fec­tive from June 5, the bank said.

“As the prop­erty price in Hong Kong is surg­ing, the timely ad­just­ment of mort­gage rates could help pru­dently man­age our risk,” said Florence Chan, the head of se­cured and re­tail lend­ing in the bank’s per­sonal bank­ing and wealth man­age­ment de­part­ment. “We will keep the mort­gage rates and cash re­bate un­der con­stant re­view and do not rule out the pos­si­bil­ity of fur­ther ad­just­ment.” Hong Kong has one of the most ex­pen­sive prop­erty mar­kets in the world and pri­vate home prices keep break­ing records, de­spite HKMA’s eight rounds of mort­gage tight­en­ing mea­sures since 2009.


HSBC is rais­ing the rate on mort­gages linked to Hibor by 10 ba­sis points to Hibor + 1.4 per cent.

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