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RESIDENTIAL PROPERTY | Staff Reporter, Hong Kong
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Why homebuyers must be extra prudent in assessing their ability to repay mortgage loans

Interest rate hikes could continue until 2019.

Potential homebuyers should be prudent in assessing their ability to repay mortgage loans in light of the US interest rate rise.

Financial Secretary Paul Chan made the statement to the media after the US Central Bank raised interest rate by 0.25%.

Mr Chan said the interest rate hikes will continue well into 2019.

“Under the peg system, Hong Kong dollar interest rates will need to follow. Although the magnitude will be different and the timing may not be the same, eventually we have no choice. If their interest rate continues to rise, Hong Kong interest rates will follow.”

Mr Chan added potential homebuyers should bear in mind that the interest rate hike cycle will have a negative impact on property prices.

“I would like to remind property purchasers that according to our past experience, when this interest rate hike cycle starts, eventually Hong Kong interest rates will follow and consequently there will be a negative impact on property prices.

“So one has to be very careful in assessing their ability to repay when they raise mortgage loans to buy properties.”

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