Zhongyuan: It is expected that by the end of the year, actual mortgage rates in the Hong Kong property market could fall to 3.75%.

The Fed announced early this morning a 50 basis point cut in the federal funds rate, to a range between 4.75% and 5%. At the same time, HSBC announced a cut in its prime lending rate (P) by 0.25% to 5.625%. Wendy Wong, Managing Director of Zhongyuan Mortgage, pointed out that HSBC's cut in the prime lending rate (P) of 0.25% has a benchmarking effect, and she expects other banks to follow suit, as Hong Kong has entered a rate-cutting cycle following the US. She predicts that by the end of the year, market interest rates could drop to 3.75%, easing the burden on property buyers. She stated that the 0.5% rate cut in the US exceeded market expectations, and with the recent faster decline in Hong Kong dollar interbank rates, the reduction has been greater than in the US, prompting banks to immediately start their rate-cutting cycles. The reduction in the prime lending rate (P) means that interest rates for new mortgages and existing property owners can all be reduced simultaneously, with market interest rates (including H+1.3% and P-1.75%) dropping to 3.875% (calculated as H+1.3% capped at P-1.75% (P:5.875%)). A decrease of 0.25% in P means that the actual interest rate will go from 4.125% to 3.875%, and it is expected that the US rate cut this year could total 1%.