Rate rise expectations mount in Hong Kong property market following Fed chief’s comments
But property consultancy Knight Frank says likelihood of near-term rise in prime rate by city’s note-issuing banks remains low
Following Warsh’s comments at the Jackson Hole economic symposium on Friday, the CME FedWatch tool, which tracks Fed funds futures contracts, indicated that expectations of a rate rise in the United States this month had doubled, with markets pricing in a 60 per cent likelihood.
However, global property consultancy Knight Frank said in a news release that the likelihood of note-issuing banks in Hong Kong raising the prime rate in the near term was low – projecting it would remain unchanged or rise by a maximum of one-eighth of a percentage point.
In Hong Kong, the prime lending rate – the lowest rate of interest that banks charge commercial borrowers – remains a key reference rate for mortgage pricing and borrowing costs. Analysts said more homebuyers were now tending to opt for fixed-rate mortgages, with interest rates that remained unchanged even if the Hong Kong interbank offered rate (Hibor) or the prime rate rose.