RATES : Hibor : Min. = HSBC : Max. = HSBC
- Feb : 0.19% :+1.80 = 1.99%:+2.30 = 2.49%
- Sep : 0.28% :+2.30 = 2.58%:+2.70 = 2.98%
=Rise :+0.09% : Min. + 0.59%: Max. + 0.49%
Period : Rate(%)
1 Day-- : 0.05
1 Week- : 0.06
1 Month : 0.21
2 Mos.- : 0.25
3 Mos.- : 0.28
6 Mos.- : 0.36
Rise in rates sends prices, sales tumbling
Home seekers back off because of higher cost of borrowing and shaky state of global economy
Peggy Sito and Sandy Li .. Sep 21, 2011 - SCMP
A spate of bad news on the home front, including another rise in interest rates, has sent Hong Kong home prices and deal numbers tumbling.
The latest blow to market confidence came on Friday when the city's two biggest home lenders, HSBC and Bank of China (Hong Kong), raised their mortgage interest rates.
Despite price discounting in the secondary market of up to 7 per cent by anxious sellers, just 15 flats were sold in the city's 10 biggest estates at the weekend, with zero deals recorded in five of them. The sales were down by more than half from the 33 deals done in the 10 large estates over the previous weekend and compare with an average of nearly 40 deals per weekend in the year's first half.
Just six new flats sold over the weekend of September 17-18, the lowest weekend total for the year and down from eight the previous weekend, the regional head of property research at Samsung Securities (Asia), Lee Wee Liat, said. In the first half of the year an average of 100 new flats were sold each weekend.
The cause of the latest declines was Friday's increase in rates, the fifth for the year, agents said. The higher borrowing costs come on top of uncertainty about the global economic outlook, nervous bidding at recent land auctions, falling stock prices and the release by developers of new projects at prices that are close to, and in some cases lower than, prices in the secondary market.
HSBC increased the interest rate on mortgages based on the Hong Kong interbank offered rate (Hibor) from Hibor plus 1.8-2.3 per cent, to Hibor plus 2.3-2.7 per cent
. Hibor is the rate banks charge for lending to other local banks.
HSBC also raised its prime-based rates from prime minus 2.7 per cent to prime minus 2.1-2.4 per cent
. The new rates took effect on Monday.
Bank of China (HK) raised its Hibor-based rates to Hibor plus 2.0-2.5 per cent from Hibor plus 1.8-2.3 per cent. More local banks are expected to follow the market leaders.
"The new round of mortgage rate hikes initiated by HSBC last Friday dampened secondary-market sentiment," Samsung Securities' Lee said. "Some homeowners lowered their prices, but potential buyers maintained their wait-and-see attitude."
The senior sales director at Hong Kong Property's Whampoa Garden branch, May Chan, said only one flat changed hands on the estate over the weekend, after the owner cut his asking price by 7 per cent from HK$3.8 million to HK$3.58 million.
"Half of the eight appointments we made on behalf of buyers were cancelled over the weekend after the higher mortgage rates were announced
. Sales had already begun slowing, but the news of another increase in home loan rates turned the market sentiment from bad to worse," she said.