The outcome of the U.S. Federal Reserve’s meeting on interest rates is closely watched. Financial Secretary Chen Maobo said in a newspaper interview yesterday that Hong Kong will inevitably need to raise interest rates, but the liquidity of the banking industry is still relatively sufficient, and Hong Kong does not need to follow the rate and speed of US interest rate hikes. He expects the prime rate to be raised for the first time in four years in the next few months, depending on the flow of banks and deposits.
He explained that the current interbank offered rate (Hibor)-linked mortgage loan interest rate is 2.2%, which is far lower than the 9.5% in 1998. Even if the interest rate is slightly increased, the two are not comparable. He said that the possibility of home buyers falling into negative equity is much lower now, and the underlying housing demand is still strong, and the society should not be pessimistic regarding the property market.
Chen Maobo also pointed out that the housing supply in Hong Kong is still limited, so the authorities do not plan to relax demand management measures, and will spare no effort to increase land supply and speed up housing supply. He also said that building housing on the edge of country parks is expected to help alleviate the chronic shortage of affordable housing.
Originally published on AM730 https://www.am730.com.hk/local/Hong Kong will inevitably raise interest rates-Chen Maobo-Property market crisis is unlikely/330859