The city's largest mortgage loan provider, HSBC, announced on Wednesday that its Hibor-related mortgage loan rates will be raised by 0.3 percentage point effective today, a move that could further cool sentiment in the local property market.

The lender will increase the Hibor-linked mortgage rate by 1.8 percent to 2.3 percent (Hong Kong interbank offered rate) - up from 1.5 percent to 2 percent - HSBC said in an e-mailed statement issued on Wednesday.

The prime-linked mortgage rate will be lowered to prime rate minus 2.7 percent, it added. That compares with a prime rate of minus 1 percent to 1.5 percent earlier, the statement said.

The effective interest rate for HSBC Hibor-related mortgage loan borrowers will be 2.5 percent as of today, while the effective interest rate for HSBC prime rate-related mortgage loan borrowers will be 2.3 percent.

Before the HSBC hike, other local mortgage loan providers had already started a new spate of mortgage rate hikes. DBS (Hong Kong) last week raised its Hibor-related mortgage loan rate by 0.5 percentage point to "Hibor plus 2 percent to 2.5 percent". CCB International also raised its mortgage loan rate by 0.5 percentage point to the same level.

"As HSBC is the largest player in the local mortgage loan market, I predict more mortgage loan providers will follow suit, and the mortgage rate hike will be around 30 to 50 basis points in the second half of 2011," mReferral Mortgage Brokerage Services Chief Economic Analyst Sharmaine Lau told China Daily.

"Increasing mortgage payments, coupled with the recent restriction of the down-payment ratio for homebuyers to apply for a mortgage loan; all these will add more financial burdens for home buyers," Lau said.

The city's de facto central bank, the Hong Kong Monetary Authority (HKMA), last month tightened down-payment ratios for homebuyers for the fourth time since 2009, as well as levying restrictions on non-local residents who wish to purchase residential flats in the city for the first time.

The local property market has shown signs of cooling down following the recent flurry of mortgage rate hikes that started in April and the HKMA's actions. The number of local property transactions fell for the sixth consecutive month in June as the number of units changing hands fell 1 percent to 9,043 while the value of transactions rose 60 percent to HK$52.9 billion, the highest since November 2010, according to Land Registry data.

oswald@chinadailyhk.com

China Daily

(HK Edition 07/07/2011 page2)