The Hong Kong Monetary Authority (HKMA) has advised various commercial lenders, including Standard Chartered Bank and Wing Hang Bank, against offering mortgages with extremely low interest rates, according to a report by The Standard.
Wing Hang Bank reportedly offered mortgages as low as prime (5.25 percent) minus 3.15 percent. An employee at the bank said the lender is prepared to offer a 2.1 percent rate for mortgages above HK$5 million (S$807,008) to clients with good credit records. For home loans amounting to less than HK$5 million (S$807,008), the rate would range from prime minus 2.95 to three percent.
However, sources noted that the bank could offer prime minus 3.15 percent for loans below HK$5 million (S$807,008) and that StanChart could also quote the mortgage rate to selected customers.
The HKMA also urged lenders to exercise restraint in lowering mortgage rates. The HKMA had, in March 2010, set out a list of reference mortgage rates for banks.
Although the current floor for mortgage rates is prime minus 3.1 percent, or 0.7 percent above the Hong Kong interbank offered rate (HIBOR), rates at StanChart and Wing Hang stood at 0.05 percent, far below the reference rate.
Last Friday, Arthur Yuen Kwok-hang, Deputy Chief Executive at HKMA, discussed the rates with bank executives.
Wing Hang offered no comment, while a StanChart spokesperson said the lender maintains its rates at prime minus two to 2.4 percent. However, select clients, such as those who have mortgaged up to 90 percent of the value of their property, are given unspecified privileges.
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