HSBC and BOC have stopped offering the popular loans whilst ICBC will stop on May 1.
Bloomberg reports that Hong Kong banks are terminating their fixed-rate mortgage programmes as interbank lending rates surge following the Hong Kong Monetary Authority’s move to defend its weakening currency peg.
Bank of East Asia Ltd. is no longer accepting applications for home loans more than two months before it had originally planned to end the program. Industrial & Commercial Bank of China (Asia) Ltd. will stop from May 1 whilst bigger rivals HSBC Holdings Plc and BOC Hong Kong (Holdings) Ltd. have stopped offering fixed-rate mortgages as early as last month.
These loans were provided at 1.68% for the first year of a new mortgage, lower than the 2.15% industry standard, according to data from Centaline Mortgage Broker Ltd.
The discount, however, became costly to maintain as interbank rates surge with the three-month borrowing cost hitting the highest since December 2008.
“The banks will have to bear all the costs at least for the first year if they continue offering fixed-rate loans,” said Ivy Wong, managing director at Centaline Mortgage. “Some of them were probably losing money already.”
Here’s more from Bloomberg:
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