HIBOR-Based Mortgage Plan

 


Bank Lending Rate in Hong Kong remained unchanged at 5. Why millennial ex-equity trader switched to cryptocurrency exchange.

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Is this simply a risk exercise like what twincm3 is saying and banks across Hong Kong are trying to decrease their loan-to-deposit ratio or could this be linked to a bottom line exercise as banks in concert increase their spread to try and increase their returns on mortgages? Actual rates have moved from 0.

Maybe, yet to come? I just talked to our treasury dept. However, the rise in spread is more prominent. As far as our bank is concerned, we will cherry-pick deals very selectively ; will only look at lucrative deals and will keep funds for key relationship clients.

My experience has shown me that HK banks try to increase the spread around this time of year - and the push up this year was particularly big. But by the time January rolls around, competitive pressures begin to force spreads back down. Therefore, if this is a "seasonal spread grab", it may get clawed back within a few months as competitive pressures mount.

I am watching this matter closely since I have a property to sell. And I believe that narrower spreads, combined with some ongoing increase in rents may bring buyers back into the market within a few months.

Of course, if confidence is undermined by an ongoing global stock market crash, that may not happen. Experience tells me that prices rarely fall straight down for long, and even if stocks are lower before the end of next year, we may have some periods were HK property prices rise. Perhaps we will see one much sooner than the pundits think. I am sure that is true with respect to Corporate Lending I myself was once a Lending officer with one of the largest global banks - so I have some experience with that.

But I think that HK's Mortgage lending banks cannot afford to be too picky for too long, or their profitable mortgage portfolios will begin to run off. In they had a great first half, and so could afford to get picky by September - they had already made their budget for the year. But when the start off the new year with a clean slate, and mortgage loans do not come rolling in, they will need to become increasingly competitive, and that is when you will see the spreads coming down.

My opinion is that the spreads they are getting now reflect some element of "profiteering greed. If losses start to mount, they will stay in the bunker. But no one is losing money right now on HK mortgage loans, so these will be seen to be a "safe asset" once again, and the competitive forces will return.

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