The public mortgage payments to endure expensive interest rates
Nov 25, 2022
Hong Kong
By Internet
  • City News
  • Interest
  • Mortgage
  • Property
1 month interest rate rose through 4% 14-year high, the bank potential to transfer costs.

Hong Kong Interbank Offered Rate (HIBOR) continues to move high, and the 1-month mortgage-related interest rate rose through 4% yesterday to 4.05%, continuing to see a new high of more than 14 years, and significantly higher than the current 2.875% to 3.375% of the actual mortgage rate, banks are bound to pass on the cost.


Some industry forecasts, in December, after the U.S. interest rate, local banks will again raise the prime rate (P) not less than 0.25%, H by the capping level will move up again so that the actual mortgage rate is high to 3.625%, when the monthly mortgage payments for new construction compared to the low interest rate level at the beginning of last year, an increase of 33.1%, the same 5 million yuan loan, the monthly payment that increased by nearly 6,000 yuan.


In the current public utility services are crazy price increases, and then increase the mortgage rate fears become the last straw to fall on the mortgage people.


The minutes of the Federal Reserve's interest rate meeting released yesterday showed that although officials hinted at a smaller rate increase in the future, but still said they saw no signs of weakening inflation.


The market generally expects that the Federal Open Market Committee (FOMC), which sets interest rates, will lower the rate hike to 50 pips in December after four consecutive hikes of 75 pips.


By the U.S. interest rates continue to rise is expected to drive the Hong Kong Interbank Offered Rate yesterday continued to move high, with the 1 month mortgage-related interest rates rose through 4 percent, to 4.05024 percent, since October 17, 2008 (4.19 percent), that is, more than 14 years after the new high.


The 3-month interest rate rose to 5.2%, a new high of more than 15 years since October 18, 2007 (5.41%).


A few days ago, Standard Chartered Bank has been unable to resist, up the H mortgage cap rate of 0.25%, market participants are also expected that when the Federal Reserve next month, after raising interest rates, will also stimulate Hong Kong's interest rates higher, banks are bound to transfer costs to the mortgage holders, and is estimated to increase the prime rate, an increase of 0.25%.


After the increase in P, it also means that the cap level of H mortgage to move up, so that the mortgagee's contribution increases.


Assuming that the loan amount is $5 million and the tenure is 30 years, the actual H-mortgage rate will be 1.45% (H+1.3%) with a monthly payment of $17,991, assuming that the monthly mortgage rate is 0.15% at the beginning of 2021; at present, the monthly mortgage rate has exceeded 4%, and the actual mortgage rate will be 3.375% with a maximum cap rate of P-2.25%, increasing the monthly payment to $23,208, a difference of $5,217 or $28.208 from the beginning of last year. The difference is $5,217 or 28.9%.


If the U.S. interest rate in December, the Hong Kong Bank and then increase 25 points, the capped interest rate will see 3.625%, the monthly payment becomes $ 23,940, a difference of up to 5,949 yuan or 33.1%, the difference in expenditure is enough to rent a small tenement unit in the city.


Meridian mortgage referral chief vice president Edmund Tsao pointed out that the recent interest rate continues to rise, because near the end of the year, banks are affected by seasonal factors and capital constraints.


He mentioned that the HKMA began 41 degrees on May 12 to receive money, the balance of the Hong Kong banking system has dropped to about 96.5 billion yuan level, the market is expected to continue next month the Federal Reserve to raise interest rates by 0.5%, when the interest rate differential between Hong Kong and the United States will further expand, coupled with the decline in bank balances, interest rates are naturally high.


In the cost of funds under pressure, recently have seen a large bank to raise the H press the lock interest rate ceiling of 0.25%. He predicted that next month, Hong Kong banks will increase the prime rate, the estimated rate of increase of about 0.25%.


In the case of rising interest rates, will further push up the actual mortgage rate level of new mortgage customers.


Centaline Mortgage Managing Director Wang Mei-feng also predicted that after the U.S. interest rate in mid-December, local banks will again raise the prime rate, expected to P increase by no less than 0.25%.


She said that the interbank interest rate by the level of U.S. interest rates, the local Hong Kong dollar supply and demand, seasonal and financial investment environment and other factors, if the interest rate continues to rise also often lead to banks to raise the fixed deposit interest rate to absorb deposits, these circumstances reflect the overall cost of funds has been rising, the bank has to raise the mortgage rate.


Wang Mei Feng also said that the Hong Kong banking system balance has fallen through the level of 100 billion yuan to 96.5 billion yuan, the interest rate has risen to the level of the U.S. interest rate; yesterday, the 1-month interest rate breakthrough of 4% has been significantly higher than the market interest rate between 2.875% to 3.375%, coupled with some fixed deposit interest rates have been more than 4%, reflecting the bank's mortgage business is really "doing", in the overall cost of funds has risen, mortgage rates have been adjusted upward pressure The overall cost of capital has risen, mortgage rates have upward pressure.

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