Developers deploy discounts to offset mortgage rate hikes
Sun Hung Kai Properties rolled out 16% on its Park Yoho property.
Hong Kong’s first property sale after the across-the-board increase in mortgage rates was met by aggressive market takeup with Sun Hung Kai Developers selling 112 out of 131 units of Park Yoho for an average price of $14,549 psf, reports South China Morning Post.
The strong market response comes after the developer rolled out attractive 16% discounts to keep buyers interested amidst tightening liquidity conditions brought about by broad-based mortgage rate hikes led by Citibank.
The city’s top mortgage banks, HSBC, Bank of China and Hang Seng Bank, have all raised their mortgage rates by 10 basis points effective today, signalling the end of the city’s ultra low interest rate environment.
This means that new mortgage borrowers from these banks will have to shell out an additional $50 per month for every $1m of loan for a 30-year tenure.
Also read: Approved mortgage loans down 4.8% to $40.6b in June
The across-the-board rate increase has been widely anticipated by the market amidst the tighter monetary policy being charted by the central bank in order to prop up the struggling Hong Kong dollar.
Banks like Bank of East Asia, ICBC, HSBC and BOC (Hong Kong) have already scrapped their fixed-rate mortgage plans in response to surging interbank lending rates.
“We should not expect that the ultra-low interest rate environment will continue unabated. We must carefully consider whether it is possible to cope with the increase in interest expense on loans, and we must also pay attention to the increase in interest rates to asset prices,” Financial Secretary Paul Chan said in an earlier blog post.