Hong Kong's three note-issuing banks keep prime rates unchanged; mReferral expects HKD interbank rates may challenge levels above 3%

The Federal Reserve raised interest rates by 0.25% as the market expected, restarting rate hikes for the first time since July 2023. Hong Kong's three note-issuing banks, HSBC, BOC HONG KONG (02388), and Standard Chartered Hong Kong, announced that they would keep interest rates unchanged. HSBC announced that it would keep its prime rate unchanged at 5%. HSBC's rates for HKD savings deposit accounts also remained unchanged, with an annual rate of 0.001% for account balances of HKD 5,000 or above; balances below HKD 5,000 would continue to earn zero interest. BOC HONG KONG announced that its HKD prime rate and current savings deposit rate would remain unchanged, at an annual rate of 5% and 0.001%, respectively. Standard Chartered Hong Kong announced that its HKD prime lending rate would remain unchanged at 5.25%, and its HKD savings account rate would also remain unchanged. Cao Deming, Chief Vice President of mReferral Mortgage Brokerage Services, said that U.S. non-farm payrolls added 162,000 jobs in August, while core CPI rose 0.3% month on month. Both figures were higher than market expectations, and coupled with the recent re-escalation of geopolitical tensions, the Federal Reserve was forced to raise rates earlier to prevent inflation data from continuing to surge. Cao Deming said that although Hong Kong's interest rate trend is closely linked to U.S. interest rate movements, even if the United States begins to raise rates, Hong Kong banks do not need to immediately follow with adjustments to the prime rate (P). Referring to the 2022 to 2023 rate hike cycle, the United States raised rates for the fifth time in September 2022, and only then did Hong Kong begin to follow with its first rate hike, with an increase of only 0.125%. This time, HSBC did not follow with a rate hike, which is still a positive short-term influence on the property market. Today's one-month Hong Kong Interbank Offered Rate (HIBOR) was quoted at 2.9%. Cao Deming expects that HIBOR will challenge levels above 3% in the short term. Based on the current general new H mortgage plan of H+1.3% and a capped rate of 3.25%, H mortgage borrowers will still need to repay their mortgages at the capped rate within the year. On the other hand, currently only one large bank continues to offer a fixed-rate mortgage plan until the end of this year. Although the rate has been raised from 2.73% to 2.93%, it is still 0.32% lower than the H mortgage cap. With interest rates possibly rising further in the future, he expects that a certain number of customers will still choose fixed-rate mortgage plans. There are still uncertain factors in the direction of U.S. interest rates and monetary policy. Cao Deming advised mortgage borrowers to have a long-term and prudent financial plan. Those intending to buy property should also regularly monitor interest rate trends before entering the market, avoid borrowing to the maximum when applying for a mortgage, reserve sufficient funds, and choose suitable and affordable properties based on their own capacity.