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Christine Chan

The cut-throat mortgage war has moved into the secondary market, with Citic Ka Wah Bank yesterday saying it hoped to lure homebuyers with a fixed interest rate of 0.88 per cent for a six-month period - the lowest  in Hong Kong.

The bank said it would charge  customers a fixed interest rate as low as 0.88 per cent on any home purchases worth between  $1 million and $4 million.

Previously,  buyers were offered low rates for certain projects and new flats as part of a deal by developers to subsidise cheap loans to boost the primary market.

Citic Ka Wah is offering a fixed rate of 1.8 per cent for the first year, rising to 2.3 per cent in the second year, well below the prime rate of 5 per cent.

Citic Ka Wah executive vice-president and retail banking head Lorainne Lam Lau Tak-mi said the bank lowered the mortgage rates because the unemployment  figures and mortgage default rate had improved in the first half of this year, while overall funding costs had remained low.

'Home-buying  is one of the most important investments in our lives. We are aware of the diversified needs for mortgage financing,' she said.

Mrs Lam said the bank's mortgage loan book had risen more than 20 per cent  in the first four months of this year and it was  confident demand would continue with the new rates on offer.

Last week, the Bank of East Asia  offered a fixed interest rate as low as 0.28 per cent  for the first year of a mortgage to buyers of the Pacifica in Cheung Sha Wan, a residential project developed by Cheung Kong (Holdings).

The sweetener  undercut the interest rate offered by HSBC and Sun Hung Kai Properties'  mortgage plan last  Thursday,  where buyers of  the Park Island Oceanfront project in Ma Wan were offered a fixed interest rate of 0.38 per cent  for the first year.

Ricacorp Mortgage Agency said  Citic Ka Wah's rate was the lowest for a six-month period but not if  the full year was considered.



Ka Wah steps up mortgage rate war