Major commercial banks in Hong Kong are now offering cash rebates on mortgage financing, sparking competition among lenders to attract homebuyers as the Federal Reserve prepares for an expected rate cut. Banks such as Bank of China (Hong Kong) and Standard Chartered are providing discounts between 0.1 per cent and 0.25 per cent to prospective borrowers, depending on factors like loan size and creditworthiness, according to Centaline Mortgage Broker.
Ivy Wong Mei-fung, managing director at Centaline, stated that these increased rebates reflect banks’ optimism about the property market. She added that more lenders are likely to follow suit, particularly as the housing market begins to show signs of recovery.
During the pandemic, lenders were cautious about issuing new home loans as households faced financial challenges. Market-boosting measures implemented in February have since lost momentum, with property prices softening. However, the imminent rate cut by the Fed has encouraged banks to take a more favorable stance on mortgage applications, normalizing the approval process and boosting homebuyer confidence.
Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral, pointed out that the market expects the Fed to announce a rate cut soon. This could lead to a decrease in Hong Kong Interbank Offered Rate (Hibor), which would ease pressure on mortgage funding costs for local banks. Global optimism was bolstered after Federal Reserve Chair Jerome Powell hinted at a reduction in borrowing costs, marking the first rate cut since March 2022.
Rate traders are predicting a full percentage point cut in the US by the end of the year, which could influence Hong Kong’s commercial banks to adjust their mortgage strategies accordingly. These changes are expected to boost confidence in the property market, following recent transactions like Four Seas Mercantile Holdings’ purchase of office space in Kwun Tong.
Despite this renewed optimism, Joseph Tsang, chairman of JLL Hong Kong, cautioned that the excitement might be short-lived as developers prepare to launch new housing projects. He suggested that any immediate impact on the property market may be temporary.
In the meantime, property developers are already taking steps to entice homebuyers, with Ricacorp Research recording 87 property deals across 50 major housing estates last week—the highest number in 12 weeks. Meanwhile, six of Hong Kong’s largest banks, including HSBC, Hang Seng Bank, and Bank of East Asia, have pledged to expedite loan approvals for small businesses and mortgage borrowers, further supporting the local property market.
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