Hong Kong’s largest banks are likely to offer new mortgages to ease the burden on homebuyers amid elevated interest rates, but experts doubt that the trend would overcome the factors weighing down the struggling property market.
HSBC, one of the city’s three currency-issuing lenders, unveiled on Wednesday new mortgage plans offering a fixed rate of 3.18 per cent for the first three years, or 3.03 per cent for the first five years. In both cases, the rate for subsequent years is the prime interest rate minus 1.75 per cent.
The bank had offered fixed-rate plans at 3.25 per cent for three years or 3.15 per cent for five years starting in September.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
With the likes of New World Development (NWD) selling new flats at its State Pavilia project in North Point and Kerry Properties offering units in Hava in Yuen Long this month, the latest mortgages mean more options for homebuyers.
“Large banks may follow HSBC,” said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. In September, Bank of China (Hong Kong) and Standard Chartered launched similar plans after HSBC, he said.
Since then, however, the Hong Kong Monetary Authority cut base rates by a cumulative half a percentage point in November and December, in lockstep with the US Federal Reserve.
The city’s commercial banks have discretion over when to change their deposit and lending rates. HSBC’s prime rate is set at 5.25 per cent, same as that of subsidiary Hang Seng Bank. The rates at Standard Chartered, Bank of East Asia, Citigroup, CCB Asia and other banks stand at 5.5 per cent.
Competing mortgage plans in the market had rates 0.32 to 0.47 percentage points higher than HSBC’s latest offerings, Tso said.
For borrowers with a 30-year, HK$5 million (US$642,000) loan, the lowest available floating-rate mortgage plan is 3.5 per cent, or a monthly payment of HK$22,542 currently. The new HSBC schemes could save such buyers HK$883 or HK$1,291 a month during the first three or five years, mReferral said.
“The new fixed-rate plan can reduce the risk of mortgage-rate fluctuations, which has a positive impact on home sales,” Tso said. “It can reduce the cost of home purchasing, so buyers can easily enter the market.”
Hong Kong’s home sales saw some improvement last year, but remained hobbled by high interest rates as well as an economic slowdown.
Developers completed 24,261 new homes in 2024, a 20-year high, according to data from Centaline Property Agency. However, only about half of them found buyers, far lower than the 80 per cent sell-through rate recorded from 2014 to 2021, the property agency added.
With uncertainty over interest rate cuts in coming months as well as worsening geopolitical tensions, some analysts have observed a “more cautious” stance among property investors.
Ricacorp Properties estimated that sales this month were not likely to gain momentum after January transactions fell to a four-month low of 4,948 units, according to official data. The long-term outlook was also bleak, said Derek Chan, head of research at the property agency.
“The Hong Kong property market remains constrained by a slowing economic growth, high property prices and policy regulations, along with uncertainties in global interest rates and trade policies,” Chan said.
“A single mortgage plan is unlikely to provide a huge boost to the overall property market. Significant support will only materialise if subsequent economic data improves or policies are further relaxed.”
On Wednesday, Kerry released the first price list of 120 units in the Hava project at an average price of HK$10,658 per square foot. The list comprises 67 one-bedroom flats and 53 two-bedroom units. The average price is about 15 per cent higher than a neighbouring project, Lai Sun Development’s The Parkland, which priced its first 50 units at HK$9,278 per square foot in September.
Meanwhile, NWD said on Wednesday that it received more than 5,500 cheques from buyers hoping to secure one of the 168 units for sale on Saturday at State Pavilia, which means about 32 buyers are competing for each unit.
Additional reporting by Salina Li
More from South China Morning Post:
- Hong Kong developer’s default could send shock waves through property market: S&P
- Hong Kong’s NWD raises prices for State Pavilia flat sale amid ‘enthusiastic’ interest
For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
