Some of the current refinancers are those who took out mortgages about two years ago and are now past the "penalty period". The most favorable mortgage plan two years ago is H+1.3%, which is the same as the most favorable H mortgage plan in the market now, and is also the lower level in 10 years.

At the same time, there is now a cash rebate for refinancing, so there is still money in the pocket after deducting the legal fees, driving demand for refinancing.

In addition, many new homeowners who have used the developer mortgage plan (commonly known as breathing plan) to attend the meeting a few years ago, after the first few years of the "honeymoon period", the interest rate will increase a lot, many people will plan to switch to the bank to reduce interest expenses.

Since the introduction of the new mortgage insurance, the maximum price of a property that can take out a high percentage mortgage has been increased to $19.2 million, which has benefited many people who are choosing to take out a larger mortgage from a developer to save money.

Home buyers can consider their own conditions and practical needs, consider taking the last train of low interest rates before the interest rate hike and refinance to cope with the increased interest expenses under the interest rate hike cycle.

In fact, it is an indisputable fact that interest rates have been raised. As the Hong Kong banking system is still abundant, the chance of interest rate hike in Hong Kong is relatively small.

But with the outflow of capital, Hong Kong's money is getting tighter, bank balances will gradually decline and interest rates will rise. Hong Kong's interest rates are undoubtedly on an upward trajectory, so mortgage buyers should switch to a mortgage plan with a lower interest rate before the interest rate hike cycle to take advantage of the last chance of low interest rates.

Home buyers can consider their own conditions and practical needs, and consider taking the last train to low interest rates before the interest rate hike, and switch to a mortgage to cope with the increased interest expenses under the interest rate hike cycle. The following four categories of people should refinance as soon as possible to capture the tail end of the refinancing offer.

As mentioned above, in recent years, developers have been offering "breathing plans" to attract buyers when they start selling new properties.

Although the interest rate of the H-mortgage plan has reached the maximum lock-in rate, the contribution is still much lower than that of the Breathe Plan after the honeymoon period.

Although many banks have raised the interest rate lock ceiling, there are still a few banks that still offer H+1.3% mortgages with a cap rate of 2.5% in order to compete for business, and many plans offer very tasty cash rebates.

For example, if you borrow $8 million, you can enjoy a cash rebate of up to $144,000. At present, the cost of refinancing is generally only $10,000 or so in attorney's fees.

For example, if a buyer buys an $8 million property, he or she will have to pay $1.2 million in taxes ($8 million X 15%) if he or she owns another property, but only $300,000 ($8 million X 3.75%) if the property is bought in the name of a first-time buyer.

Therefore, many couples who bought their property in joint names in the early years, when they want to buy an additional floor, one of them would like to transfer the original property to the other one by a close relative and buy the property back as the first buyer. A refinancing allows one of them to return to first home ownership status.

If the mortgage is guaranteed by a guarantor, a refinance is the best way to help the guarantor "get rid of the name". Many buyers fail the stress test when they first purchase a home and need to add a guarantor in order to pass the test.

However, being a guarantor means having a mortgage, and when a guarantor needs to buy a property with a guarantor, the stress test requirement drops from 60% of monthly income to 50% of monthly income after a 3% increase in interest rates.

When the borrower's income increases and one person is able to make the mortgage payment, the transfer helps the guarantor "get rid of the name" so that the other person can purchase a property and apply for a mortgage with less stress test.

Those who wish to refinance can contact a mortgage specialist directly for further information on refinancing.

Some banks have more secure payment arrangements available. In November 2022, HKAB announced that banks will provide timely and direct electronic transfers of mortgage funds between banks when refinancing residential properties, thereby avoiding payment-related risks.

On November 7, 2022, HKAB announced that the banking industry would offer customers an additional option to the current payment arrangements for property transactions.

The new payment arrangement is authorised by the Hong Kong Monetary Authority for re-pledging transactions of residential properties in Hong Kong (including individual car parking spaces or residential with car parking spaces in residential buildings).

Under the previous practice, when a refinancing transaction is carried out, the mortgage payment is first transferred to a solicitor firm for escrow and then a cheque is issued by the solicitor firm to settle the customer's original mortgage loan.

Under this new payment arrangement, the banks provide a timely and direct electronic transfer of mortgage funds to each other, which has the advantage of avoiding payment-related risks, such as unpredictable freezing of customer funds, thereby effectively enhancing customer protection.

In the most common refinancing process, when a borrower changes mortgage banks, the new mortgage bank will pay the mortgage payment directly to the original mortgage bank through the interbank payment system.

If the loan approved by the new mortgage bank is higher than the original mortgage loan, the new mortgage bank will transfer the remaining amount to the borrower's account with that bank.

The new payment arrangement is also applicable to other refinancing situations, such as switching borrowers without switching mortgage banks, and cashing out a mortgage on an unmortgaged property.

When applying for a refinancing, the bank will advise whether the new payment arrangement is appropriate for the refinancing situation.

Under the original mortgage arrangement, the new mortgage bank approves the mortgage loan, the funds are paid to the bank's attorney, the bank's attorney holds the mortgage loan, and the attorney presents the check to the original mortgage bank to pay off the mortgage loan, and if the borrower refinances the mortgage to cash out, the attorney presents the check for the cash out amount to the borrower at the same time.

Under the new arrangement, upon receipt of a refinancing application, the new mortgage bank will proceed with the approval process as usual. After the mortgage loan is approved, the refinancing applicant can opt for the new arrangement whereby the new mortgage bank will pay the mortgage amount directly to the original mortgage bank through the interbank real-time payment system, allowing the original mortgage bank to pay off the original mortgage.

At present, HSBC, Bank of China and Standard Chartered first try the new payment arrangement, the HKMA said a month there are more than a dozen refinancing transactions completed in the new way, and will be extended to all banks in Hong Kong.

At this stage, customers can choose to use either the new or the old way to process the refinancing arrangement. The new arrangement is currently applicable to residential properties and related parking spaces, and the HKMA said it would not rule out its application to more types of properties.

The HKMA also said the new arrangement will not add extra work for customers and will reduce transaction risk and help shorten transaction time in special cases such as refinancing.