In "Hong Kong Property," Centaline Mortgage Wang Meifeng: HSBC's brand new low-interest fixed mortgage enjoys the advantage of preemptive interest rate reduction, expected to be more popular

HSBC today (25th) launched a new fixed-rate mortgage plan, with a fixed rate of 2.73% for the first three years or the first five years; thereafter, the interest rate will be P minus 1.75% (P is currently 5.25%).

Wang Meifeng, Managing Director of Centaline Mortgage, stated that large banks have once again introduced new fixed-rate mortgages and further optimized interest rates and offers. The fixed rate for the first three years or the first five years of this plan is 2.73%, which is lower than the current H mortgage interest rate of 3.5% (based on the recent rise in interbank rates, the H mortgage interest rate has recently risen to the capped interest level), a reduction of 0.77%, resulting in nearly a 10% decrease in monthly payments. Although a rate cut is expected within the year, the anticipated reduction in P is only 0.25 cents to complete the P reduction cycle, and the H mortgage interest rate will then drop to 3.25%, still higher than the newly launched fixed rate of 2.73%. Therefore, the newly introduced fixed rate is lower than the current market H mortgage capped interest rate of 3.5% and the expected level of 3.25% later this year. Additionally, fixed-rate customers can also enjoy cash rebate offers and follow the market H mortgage to provide a more flexible penalty period of as short as two years, while the interest rate after the fixed period will be consistent with the current market interest rate level (P minus 1.75%; P: 5.25%). It is expected that this new fixed-rate plan will be more popular.

Wang pointed out that it is anticipated that after Hong Kong completes the P reduction cycle this year, whether local mortgage interest rates will further decline will depend on the extent of the drop in interbank rates. According to the expected actual mortgage interest rate of 3.25% and the current H mortgage capped interest rate level, the one-month interbank rate needs to fall below 1.95% for the mortgage interest rate to drop below the capped interest rate and further decline. Comparing the latest fixed-rate plan (fixed rate of 2.73%) with the market H mortgage (H+1.3%), if the one-month interbank rate does not fall below 1.43%, the fixed rate of 2.73% will still be lower than the general market H mortgage interest rate level. As of today, the one-month interbank rate is 2.73%. Unless there is a significant change in fund flows, such as a large influx of funds in May that pushed up the banking system, the Hong Kong-US interest rate spread generally will not be too wide. Therefore, the H mortgage will still need to be calculated based on the capped interest rate of P for some time.

Wang Meifeng continued to state that the bank's introduction of a fixed-rate mortgage at 2.73% for three or five years is beneficial for borrowers to lock in a lower interest rate mortgage below the current market interest rate at this stage and for the next three to five years. The interest rate is immediately reduced by 0.77 cents compared to the current rate, allowing borrowers to enjoy the effect of a rate cut in advance, reduce monthly payment amounts, and alleviate payment burdens. Moreover, it allows borrowers to maintain stable payment amounts during the fixed-rate period, which is beneficial for budgeting and precise financial planning