Hong Kong banks cut lending rates even as HKMA warns of volatility ahead

The latest rate cuts by lenders such as HSBC and Bank of China will lighten the monthly burden on mortgage borrowers by about HK$351 to HK$22,452

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The HKMA’s interest-rate cut has given Hong Kong business owners and mortgage holders a reprieve. Photo: Shutterstock

Published: 7:31am, 19 Dec 2024Updated: 4:50pm, 19 Dec 2024

Corrected [8:58am, 19 Dec, 2024]

[8:58am, 19 Dec, 2024]
The Fed said it would maintain its target rate in the range of 4.25 to 4.50 per cent and not in the range of 4.25 to 4.75 per cent

Hong Kong’s six biggest lenders lowered their prime lending rates for a third time this year, trimming borrowing costs to the lowest level in more than two years.

HSBC and subsidiary Hang Seng Bank said they would trim their prime rate by 12.5 basis points to 5.25 per cent from Friday, the lowest since August 2022. Bank of China (Hong Kong) said it would cut its rate by the same level from Monday.

Bank of East Asia, Standard Chartered and ICBC Asia, said they would reduce their prime rate by the same margin to 5.5 per cent from Monday.

The banks also said they would reduce their savings rates by the same margin to 0.25 per cent annually on deposits above HK$5,000 (US$640), while no interest will be paid on deposits below that threshold. Standard Chartered pays 0.25 per cent for deposits above HK$1.

“HSBC has decided to lower its Hong Kong dollar deposit and lending rates following another US rate cut, bringing a cumulative reduction of 62.5 basis points since September,” said Luanne Lim, CEO of HSBC Hong Kong.

“The future path of rates remains highly uncertain going into 2025. We will continue to monitor the external environment and local economic outlook, ready to adjust our rates as needed.”