Meridian: HIBOR hits a near three-year low in one month, still possible to decline to 0.5% or below in the short term.

Today, the 1-month HIBOR is reported at 0.56%, falling for five consecutive working days, reaching a new low since June 15, 2022. Cao Deming, Chief Vice President of mReferral Mortgage Brokerage Services, stated that based on the current common new-built mortgage plans with an "H+1.3%" interest rate calculation, the actual interest rate for today's H has dropped to 1.86%, hitting a new low in nearly 3 years. Cao Deming believes that the future trend of HIBOR will depend on market activities and demand for the Hong Kong dollar. If the total balance in the banking system continues to maintain a level above one billion Hong Kong dollars, there is still a possibility for HIBOR to further decrease to 0.5% or below in the short term. With the actual interest rate for H compared to the maximum interest rate cap of 3.5% reduced by 1.64%, the interest expenses for property owners can be immediately reduced, providing positive support for the property market. For a loan amount of 5 million Hong Kong dollars, with a term of 30 years, the monthly payment calculated with today's H interest rate of 1.86% is 18,133 Hong Kong dollars, compared to 22,452 Hong Kong dollars calculated with the maximum interest rate cap of 3.5%, resulting in a monthly payment reduction of 4,319 Hong Kong dollars, a decrease of 19.2%. Cao Deming pointed out that although the current HIBOR is at a low level, it is important to note that HIBOR is easily influenced by capital market activities and has significant fluctuations. Potential property buyers still need to regularly observe market trends. However, most property owners have set a cap on their interest rates, so even if interest rates rise in the future, they can continue to pay at the maximum rate, making it a mortgage plan that allows for both offense and defense. Additionally, according to the residential mortgage statistics survey conducted by the Hong Kong Monetary Authority in March, the utilization rate of H mortgages is 91.8%, an increase of 1.4% compared to the previous period. As the HIBOR rate has fallen, the advantage of using H mortgages is immediately evident. Combined with the expiration of the fixed-rate mortgage plans offered by major banks last month, Cao Deming predicts that H mortgages will dominate the market in the future, with the utilization rate of H mortgages rising to 95% or above.