Ricacorp Mortgage expects Hong Kong's interest rate hike cycle is not over yet
Nov 9, 2022
Ricacorp Mortgage expects Hong Kong's interest rate hike cycle is not over yet Hong Kong
By   Internet
  • City News
  • Ricacorp
  • property transactions
  • mortgage offers
Abstract: The US Federal Reserve has hinted that the pace of interest rate hikes may slow down in the future. According to interest rate futures, there is a 61% chance that the federal funds rate will increase by 0.5% in December and a 64% chance that it will rise to 5-5.25% by June 2023, meaning that the US will still have room to raise interest rates by 1.25% by the middle of next year.

The managing director of Ricacorp Mortgage Agency, Mr. Wong Wing-yan explained that in the U.S. rapid interest rate hikes, Hong Kong banks have increased the pressure to raise interest rates in recent months, including the recent 1-month interest rate high above 3%, has risen sharply through the universal bank H mortgage ceiling (2.875%).


In addition to the Hong Kong large, medium and small banks are high interest rates for the deposit of the move, some banks to raise the one-year fixed deposit at 5%, the Bank of Hong Kong to raise the prime rate is expected, but the rate of increase of 0.25% is slightly higher than the market expectations, Wong Wing-yan expected that Hong Kong banks may raise interest rates again this year.


Wong Wing-yan pointed out that due to the slowdown in the property market, coupled with the impact of the epidemic at the beginning of the year, many banks mortgage business is still not up to standard, is still in the third quarter have launched different mortgage offers to attract customers.


There are large banks delayed increase in the first-hand new construction H mortgage lock interest rate ceiling, there are also banks launched the first 1 to 2 years of fixed-rate mortgage plans, interest rates than the general H mortgage lock interest rate ceiling and P mortgage rate is low, and small and medium-sized banks in response to competition, repeatedly increase the mortgage cash rebate.


These concessions, together with the government's earlier measures to relax the stress test requirements, have helped offset some of the impact of the interest rate hike.


The actual mortgage rate for a second-hand property has risen to 3.125% with the banks raising the rate to 5.375%. 28.34%), and $674 (+3.25%) more than the monthly payment when the actual interest rate was 2.875% after the rate hike in late September.


Wong Wing-yan expects that the Bank will raise the interest rate once more in the year, and suggests that new home buyers should choose the immediate payment plan, which is more cost-effective than the build-to-suit plan.


On the one hand, there are still some banks that offer lower mortgage rates for first-hand properties, on the other hand, if you choose the build-to-suit plan, if the interest rate rises again when you "go to the meeting", you may have to find a guarantor to pass the bank's income requirement if your salary cannot catch up with the pace of the interest rate increase.


At the same time, mortgage payers can make good use of high-interest deposit-linked (mortgage link) account mortgage plans, some banks now allow borrowers and one or two family members of the deposit account can enjoy a high-interest deposit account equivalent to the mortgage interest rate, allowing borrowers to save funds to hedge against the impact of interest rate increases.


As the impact of the epidemic on the economy has not yet fully receded, coupled with the interest rate hike cycle is not yet complete, short-term buyers are in a wait-and-see atmosphere, buying and selling, according to the slowdown in the property market, Wong Wing-yan suggested the government to speed up consideration of a further reduction of spice for the property market, including the abolition of the "Special Stamp Duty" (SSD), and the 15% DSD rate back to double stamp duty, in order to revitalize the chain of home exchange.


In addition, the U.S. Federal Reserve raised interest rates by 0.75%, as expected, and HSBC announced today that the prime rate will be raised by 0.25% to 5.375%.


Mr. Liu Weiqiang, President of Ricacorp Real Estate, said that the market has long anticipated another interest rate hike in the U.S. and the interest rate hike in Hong Kong, so the psychological impact on property buyers is greatly reduced; and the Federal Reserve hinted that it would slow down the pace of future interest rate hikes, which is also a positive message.


As for this time Hong Kong's prime rate plus 0.25%, the rate is also acceptable, the burden of mortgage payments in Hong Kong is still low.


Liao continued, now that the interest rate increase is settled, the market situation is further clarified, which is conducive to easing the current stalemate in the property market. It is expected that more owners will be willing to increase the bargaining range in order to speed up the transaction.


And for buyers, although the mortgage interest rate is slightly higher, but the owners of a considerable reduction, but also brought a considerable attraction, it is expected that many buyers will wait for the opportunity to "execute flat goods".

icon Message