Star Valley Mortgage: Hong Kong banks interest rate cut this time is not significant, it is expected that there will be one more interest rate reduction opportunity this year.

The Federal Reserve announced a 25 basis point rate cut last night, but major banks in Hong Kong did not follow suit. HSBC only symbolically reduced the Hong Kong dollar prime rate (P) by 0.125%, from 5.25% to 5.125%. Kelvin Chuang, CEO of Star Valley Mortgage Referral, described the rate cut as not significant, but expected another rate cut opportunity within the year. Chuang pointed out that after the 0.125% decrease in P, the actual interest on new mortgages has slightly decreased from 3.5% to 3.375%. For example, for a loan of 1 million Hong Kong dollars with a repayment period of 30 years, the monthly installment will only decrease from 4490 Hong Kong dollars to 4421 Hong Kong dollars, saving only 69 Hong Kong dollars per month, a decrease of about 1.5%. Even for a loan of 5 million Hong Kong dollars, the monthly savings would only be 345 Hong Kong dollars. As the Federal Reserve resumes its rate-cutting pace, the market even expects one to two more rate cuts within the year. However, Chuang believes that rate cuts in Hong Kong banks may be coming to an end. He explained that with the prime rate at 5.125%, which is already close to the low levels after the 2008 financial crisis, there is very limited room for further rate cuts. He predicts that even if the US cuts rates further, Hong Kong banks can only cut rates once more, by 0.125%, and lock in 5% as the bottom of this rate-cutting cycle. Although the potential for further rate cuts in the prime rate is very limited, Chuang reminds that the competition in mortgage business among banks is still fierce. He expects that banks may lower the cap rate or increase cash rebates to attract customers in the future. He suggests that property buyers or owners who have not refinanced their mortgages in the past two to three years should actively evaluate their mortgage plans. By refinancing, they can enjoy lower actual interest rates and higher cash rebates immediately, as well as lock in a low-interest environment for the next two to three years.