Why Hong Kong’s interbank rate at 30-month low is a relief for homeowners, companies
Hibor-linked mortgage borrowers will save about US$40 per month after the one-month interbank rate fell by almost 1 percentage point
Mortgage borrowers and companies are likely to benefit from a sharp fall in the Hong Kong interbank offered rates (Hibor), with the lower cost of funding expected to boost the city’s property market and economy.
The one-month Hibor, which is linked to mortgage loans, weakened to a 30-month low of 2.0945 per cent on Thursday, a drop of almost 1 percentage point from a day earlier, according to data from the Hong Kong Association of Banks. The rates for three and six months fell by 61 basis points and 34 basis points, respectively.
Borrowers of a typical HK$5 million loan spread over 30 years and priced at one-month Hibor plus 1.3 per cent would see their monthly repayments fall by HK$306 (US$40) to HK$22,146 as the mortgage rate fell to 3.39 per cent from 3.5 per cent, according to local mortgage broker mReferral.
“Mortgage borrowers who have chosen Hibor to price their mortgage loans will pay less immediately,” said Eric Tso Tak-ming, chief vice-president of mReferral.
As Hibor was expected to continue to drop in the coming months amid further inflows of capital into the stock market, the trend could encourage people to borrow to buy property, he added.