Bottom seen as Hibor hits near-decade low

Finance | Kevin Xu 13 Nov 2020

The one-month Hong Kong Interbank Offered Rate, which is linked to the mortgage rate, fell to a near-decade low of 0.12018 percent, easing the repayment burden for homebuyers, but market watchers said it is unlikely go to below 0.1 percent.

Ivy Wong Mei-fung, managing director of Centaline Mortgage Broker, said she expects the one-month Hibor to range between 0.1 percent and 0.14 percent by the year's end.

The Hong Kong Interbank Offered Rate is close to US Treasury yields, so there is less room for the Hibor to fall further, she said.

The Hibor-based mortgage interest rates usually range between Hibor plus 1.4 percent and Hibor plus 1.5 percent, and can be as low as Hibor plus 1.35 percent, Wong said.

This means the Hibor-based mortgage interest rates can be as low as 1.47 percent.

With a HK$4 million mortgage with an annual interest rate of 1.47 percent and a repayment tenor of 25 years, for example, a customer only needs to pay HK$15,941 each month.

In comparison, the one-month Hibor was 0.38 percent on July 13, and a homebuyer would have needed to pay HK$16,433 per month for the 25-year loan, based on an interest of 1.73 percent. This means the homebuyer would save HK$492 per month now, with the new rate.

The fall in the Hibor came after the aggregate balance of Hong Kong banks reached HK$450 billion. Hong Kong's initial public offering market raised HK$215.9 billion in the first three quarters.

In the property market, New World Development (0017) has collected about 17,000 checks for the 343 units on offer at The Pavilia Farm phase two on top of Tai Wai Station, for about 48 times oversubscribed.

New World Development (0017) sold all 337 units on offer in phase two of The Pavilia Farm in Tai Wai on Saturday. The developer also released 343 units in the second price list in phase two at an average HK$20,399 per sq ft after discounts, 2.8 percent higher than the first price list.

The cheapest flat, measuring 330 sq ft, is offered at HK$6.99 million, or HK$21,188 per sq ft after discounts.

NWD has already collected around HK$10 billion after selling around 1,000 units in the first two phases of the project.

The first phase of the project received more than 22,700 registrations of interest in the first round of sale, the highest number of registrations since 1997.

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