Jingluo: The Federal Reserve has the opportunity to cut interest rates in the fourth quarter, which may ease the upward pressure on Hong Kong dollar interbank offered rates at that time
The Federal Reserve may cut interest rates for the first time in the fourth quarter, which is expected to lead to capital inflows into the Hong Kong market, thereby alleviating the upward pressure on the Hong Kong dollar interbank offered rate (HIBOR). The surplus in the Hong Kong banking system is expected to decrease to HKD 82.552 billion, while HIBOR has recently fluctuated upward. The market anticipates that Hong Kong banks may lower their prime rates based on commercial strategies, and HIBOR may subsequently decline. Currently, the one-month HIBOR is at 1.03%, and it is expected to challenge the 1.5% level. Homeowners with mortgages can still keep their payments below the capped interest rate as long as HIBOR remains below 2.2%
According to the Zhitong Finance APP, Cao Deming, Chief Vice President of Jingluo Mortgage Referral, stated that in recent months, the Hong Kong dollar has continuously triggered the "weak side convertibility guarantee." This morning, the Hong Kong Monetary Authority entered the market for the seventh time to buy Hong Kong dollars, and the total balance of the banking system will drop to HKD 82.552 billion. The continuous decline in the total balance of the banking system has caused HIBOR to fluctuate and rise in recent months. Although HIBOR has shown volatility, there is a chance that the Federal Reserve will cut interest rates for the first time in the fourth quarter, which may lead to capital inflows into the Hong Kong market, easing the upward pressure on Hong Kong dollar interbank offered rates; after the passage of the "Too Big to Fail" bill in the U.S., the market believes that some funds may flow into the Asia-Pacific market, and it is expected that Hong Kong banks will adjust their prime rates based on their own business strategies, with a possibility of lowering the prime rate, which may also lead to a decline in HIBOR.
On July 31, HSBC announced that the prime rate (P) would remain unchanged. Cao Deming stated that Hong Kong banks had lowered the prime rate three times last year, with both the extent and speed exceeding market expectations. Banks have not adjusted the prime rate due to considerations of U.S. interest rate trends and funding costs.
Today, the one-month HIBOR is reported at 1.03%, and it is expected that HIBOR may challenge the 1.5% level. Cao Deming pointed out that although HIBOR has risen to the 1% level, based on the common H mortgage plan "H+1.3%", the actual interest rate for H mortgages is 2.33%, which is still 1.17% lower than the capped interest rate of 3.5%. For homeowners currently repaying their mortgages, as long as HIBOR remains below 2.2%, they can still repay their mortgages at a rate lower than the capped interest rate
