Banks raise rebates in fight for mortgages

Himo Liu

Major banks are rumored to be raising a cash rebate by 0.2 percentage points to 2.8 percent to compete for mortgage customers.

That would be the highest since 2007 when Hibor retreated from a previous high.

Word is that Hongkong and Shanghai Banking Corp, Hang Seng Bank (0011) and Bank of China Hong Kong (2388) will be making the cash rebate offer.

Those major banks have quietly increased their cash rebates.

For customers who utilize a mortgage insurance program and have loan amounts exceeding HK$8 million the combined bonus offer raises the total cash rebate to 2.8 percent.

That surpasses the cash rebate of 2.6 percent earlier this month by 0.2 percentage points, marking a post-2007 high.

Meanwhile, the mortgage-related one-month Hong Kong Interbank Offered Rate has dropped by 25.768 basis points to 4.37917 percent, but it remains high.

According to information from mReferral Mortgage and Land Registry, the market share of the four largest banks in the mortgage market has decreased for two consecutive months, accounting for 68.3 percent of the total market share in April.

And mReferral noted that large banks have because of their larger deposit bases the ability to compete in the mortgage business by offering high cash rebate programs.

So it is anticipated the market share of the big four banks will recover.

However, the current high one-month Hibor puts pressure on the cost of funds. The increased cash rebate is therefore seen as a short-term promotional strategy.

It is also believed the cash rebate level may have reached its peak, so there would be limited room for further upward adjustment.

In other property-linked happenings, University Hill Phase 2B in Tai Po, developed by Sun Hung Kai Properties (0016), was said yesterday to have sold 192 of 222 flats on its third batch price list.

University Hill Phase 2A and 2B have now sold over 900 flats in one month, generating HK$6.3 billion.

In Tuen Mun, SHKP's Novo Land Phase 2A is circulating a sales brochure and will reveal a first price list next week, featuring at least 186 flats.

Elsewhere, The Knightsbridge, a development in Kai Tak involving six developers, will be launching a tender sale for 120 apartments on Sunday. The home sizes range from 836 to 1,942 square feet.

And Lai Sun Development (0488) has submitted an application to the Town Planning Board to increase the plot ratio of Yuen Long Centre for residential redevelopment, which will include 1,019 flats.