Cathay Pacific Logs 603% YoY Surge in Passenger Numbers as Flights Resume
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MONEY
HSBC to Increase Mortgage Rates Amid Hong Kong Property Slump
September 13, 2023
HSBC Holdings Plc, the leading lender in Hong Kong, is bracing to increase mortgage rates for borrowers in the region, further straining the city’s already struggling property market. HSBC is set to raise the cap on home loans linked to the Hong Kong interbank offered rate (HIBOR) by 0.5 percentage point. This change will elevate rates on new loans to 4.125% from 3.625%, effective Sept. 18.
Hong Kong’s rates have surged due to its monetary policy’s link to the U.S., impacting the economy. The city’s property market has been grappling with this challenge, as homebuyers are dissuaded by rising rates. The first half of 2023 saw developers record the lowest sales since 2019 for new residential units, according to real estate agency JLL.
A spokesperson for HSBC stated the bank’s decision to revise its mortgage rates emerged from a recent review, considering factors such as HIBOR, the bank’s competitiveness, and market pricing. The move is expected to have a significant impact, as nearly 95% of mortgages in Hong Kong are tied to HIBOR, which is likely one of the highest percentages globally.
The rate adjustment has already triggered a severe reaction in the market, with Hong Kong property stocks experiencing their largest selloff in seven months. The Hang Seng Index’s property sub-gauge plummeted by as much as 4.5%, marking the most significant drop since Feb. 13, 2023.
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