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Tuesday, July 12, 2016, 18:27

HK banks compete to slash mortgage rates

By Oswald Chan

HONG KONG - Major banks in Hong Kong are engaging in a tug of war in a bid to woo more customers amid sluggish home transactions in the city.

The city’s major mortgage loan providers, including the Hongkong and Shanghai Banking Corporation, Bank of China (Hong Kong), Industrial and Commercial Bank of China (Asia), Citibank (Hong Kong) and Standard Chartered Bank (Hong Kong), recently all slashed interest rates on their mortgage loans to attract more mortgage loan borrowers to their mortgage loan plans.

After Citibank (Hong Kong) launched a mortgage loan plan whose interest rate is hibor (Hong Kong Interbank Offer Rate) plus 1.5 percent, Standard Chartered Bank (Hong Kong) said it will offer a similar mortgage loan plan to its premier clients. ICBC (Asia) will also provide a similar plan to those qualifying clients who arrange a mortgage loan of HK$4 million or above.

The move comes at a time when property transactions in Hong Kong slumped nearly 40 percent in the first half of this year from a year ago, according to market data compiled by Midland realty, one of the city’s largest real estate brokers.

"The government should consider relaxing the ceiling of loan-to-value ratio from being capped at 60 percent to 70 percent for properties valued at HK$7 million or below.

After relaxation, this can bolster more transactions in the secondary market segment by at least 20 percent,” said Vincent Chan Kwan-hing, managing director at Qfang Network (Hongkong) Agency, a real estate broker focusing on the online-to-offline business model.

The government has introduced a spate of measures since 2010, including levying various stamp duty payments to restrict home transactions, in a bid to cool the city’s sizzling property market.

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