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Hibor Has Fallen for 8 Days; HIBOR Mortgage Rate Decreases by 0.4% in Disguised Form.

Image Caption
2020-05-06-(Wed)
【28Hse.com】  
Nearly HKD200 would save in the monthly installment payment for borrowing HKD1 million. Agents look forward to the market to rebound in the slack season of May.

The COVID-19 epidemic has eased in Hong Kong, and the government will relax the restriction of gathering. Plus Hong Kong Monetary Authority has injected capital into the market for the last few days, improving the inter-bank financial liquidity. Yesterday, the monthly Hibor was about 0.86%, a decrease for eight consecutive trading days, and it is the new low in over two years. The actual interest rate yesterday was only 2.1% base on the prevailing HIBOR mortgage interest rate H + 1.24% and was lower than the upper limit interest of 2.5%, that means the owner reduced the interest by 0.4% in disguised form. The monthly payment decrease nearly HKD600 under interest reduction, assuming a loan of HKD3 million. The real estate industry generally expects a series of positive factors to stabilize the property market.

Hong Kong Wen Wei Po Journalist Ngan LunLok

The Chief Vice President of mReferral Mortgage Brokerage Services, Cho Tak-Ming believed yesterday that the decrease of HIBOR lower than 1% is out of the market expectations, and it is believed to have a relief effect for customers who have previously selected the HIBOR mortgage. The Chief Executive Officer of Hong Kong Property, Lee Chi-Shing, also points out that the decline in HIBOR and the expectation of rising in the aggregate balance reflect an abundant market capital. The interest rate trend is believed to continue to hover at a low level, which will benefit owners adopting HIBOR mortgages.

Hong Kong Property: Data reflects ample funds.

According to Cho Tak-Ming's analysis, base on the loan amount of HKD1 million with a repayment period of 25 years, the monthly installment payment would fall from HKD4,486 to HKD4,287, a difference of HKD199 or 4.4%. Because the actual interest rate is 2.1% under the Hibor mortgage plan, which has an interest gap of 40 points from the general upper limited interest of 2.5%; It can save nearly HKD600 monthly if the loan amount is HKD3 million.

The whole term interest expense also decreases from HKD345,850 to HKD286,219, a reduction of HKD59,631, or 17.2%. The Chief Executive Officer of Residential Department of Midland, Po Siuming, points out that the sharp decrease of Hibor under 1% in one month dramatically reduces the burden on home buyers. The government 's announcement yesterday of relaxing the "Restriction of Gathering" is expected to help stimulate Hong Kong 's recent weak economy. It is believed that the first and second-hand property trading would rebound in the " poor May" with the gradual easing of the epidemic situation and the continued low-interest-rate environment, and the trend of property prices will stabilize.

Recently, the HKMA has taken multiple steps to release the liquidity of credit funds for banks. Also, the Hong Kong dollar has repeatedly touched strong exchange guarantees, which has led the HKMA to sell the Hong Kong dollar several times. The aggregate balance has increased to nearly HKD85 billion, an increase of more than HKD30 billion from the previous HKD54 billion, and will rise to the level of more than HKD90 billion. Jyu Wai-Man, the President of Hong Kong Monetary Authority, said a few days ago that the aggregate balance would increase to about HKD95 billion in two weeks, and the increase in Hong Kong dollar liquidity will further decrease the interest in Hong Kong.

Banks may reduce rebates due to the uncertain economy.

Cho Tak-Ming predicts that HIBOR will continue to decline, and the monthly HIBOR had been lower to 0.05% ( the aggregate balance was HKD318 billion at the time) since there was a record in 2006. However, the recent economic data is relatively weak, and the GDP in the first quarter fell sharply by 8.9% yearly. The Exchange Fund also recorded the highest investment loss of HKD86.1 billion in the first quarter. Cho said that with the increase in risk premiums, banks have remained prudent in the mortgage market and are expected to make further minor adjustments to relevant offers and rebates.

Wong Mei-Fung, the Managing Director of Centaline, expresses that up to 88.7% (residential mortgage statistics in March) of buyers choose the HIBOR mortgage currently, and the mortgage interest rate is as low as H+1.24% to H + 1.3%. Due to the gradual decline in HIBOR, users can enjoy rate reductions of up to 0.4% in disguised form, saving the monthly installment payment by 16%. It will provide further support to the property market that is warming up, and it is expected that the using proportion of HIBOR mortgage will rise to over 90%.

Wong Mei-Fung, the Managing Director of Centaline, points out that the monthly HIBOR continues to fall near the US interest rate or not depends on the further raise of the aggregate balance and the liquidity, including factors such as carry trade, and the HKMA will reduce foreign exchange Fund bills or not, etc.
Translated by 28Hse.com . All right reserved.