There are many mortgage plans offered by banks in the market. To choose the best plan, the two main factors to compare are the mortgage rate and cash back offer.
Some banks may use a lower mortgage rate, but their cash back is less than others, which may actually be less favourable than higher-interest mortgages.
Spacious has compiled the latest mortgage interest rates and their cash back offers for 18 banks in Hong Kong, so that you can easily compare the HIBOR-based and Prime lending rates of each bank.
Jump to: Latest Mortgage Lending Rates | Cash Back Restriction | FAQ
An Overview of 18 Banks’ Latest Mortgage Lending Rates
Mortgage plans are mainly divided into HIBOR-based-Plan (H-Plan) and Prime-based-Plan (P-Plan).
H-Plan is calculated based on the Hong Kong Interbank Offered Rate (HIBOR). The interest rate caps are generally equal to the rates of P-Plan. The table below is calculated based on the latest one-month HIBOR rate of 3.42%.
On the other hand, P-Plan is calculated based on the best lending rate (Prime Rate).
| Bank | Prime Rate | H-Plan Annual Rate | P-Plan Annual Rate | Cash Back (% of Loan Amount） |
|---|---|---|---|---|
| HSBC | 5.75% | H + 1.3% | P – 2.25% | 2.55% |
| Hang Seng Bank | 5.75% | H + 1.3% | P – 2.25% | 2.4% |
| Bank of China (Hong Kong) | 5.75% | H + 1.3% | P – 2.25% | 2.46% |
| Chiyu Bank | 5.875% | H + 1.3% | P – 2.25% | 2.3% |
| Standard Chartered Hong Kong | 6% | H + 1.3% | P – 2.25% | 2.4% |
| Bank of East Asia | 6% | H + 1.3% | P – 2.5% | 2.3% |
| China CITIC Bank | 6% | H + 1.33% | P – 2.25% | 1.5% |
| ICBC | 6% | H + 1.3% | P – 2.5% | 2.3% |
| Bank of Communications | 6% | H + 1.3% | P – 2.5% | 1.7% |
| Chong Hing Bank | 6% | H + 1.3% | P – 2.5% | 1.5% |
| CMB Wing Lung Bank | 5.875% | H + 1.35% | P – 2.25% | 1.4% |
| DBS Bank | 5.875% | H + 1.3% | P – 2.25% | 1.3% |
| Dah Sing Bank | 6% | H + 1.5% | P – 2.4% | 1.3% |
| Citibank Hong Kong | 6% | H + 1.3% | P – 2.5% | 2.5% |
| Nanyang Commercial Bank | 5.75% | H + 1.4% | P – 2% | 1% |
| Fubon Bank (Hong Kong) | 6.125% | H + 1.3% | P – 2.375% | 1.6% |
| OCBC Wing Hang Bank | 6.125% | H + 1.3% | P – 2.5% | 1.3% |
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Cash Back Restriction
The Hong Kong Monetary Authority (HKMA) has regulations on the cash back provided by banks. If it exceeds 1% of the loan amount and the borrower has already reached the maximum loan-to-value ratio, the bank must provide the cash back by deducting it from the loan amount.
For example, if the maximum mortgage loan amount is originally HK$5 million and the cash back offer is 1.5%, which is HK$75,000. Under the guidance of the HKMA, this HK$75,000 must be deducted from the loan amount, and the actual repayment amount becomes HK$4.925 million.
Some borrowers may think that deducting the cash back from the loan amount is equivalent to not receiving the cash back. In fact, instead of receiving cash, it is included in the instalment payments, making future repayments more manageable.
In addition to mortgage interest rates and cash back, the length of the penalty interest period is also crucial. Sometimes, mortgage plans that seem to offer favorable terms may have longer penalty interest periods.
Many homeowners use refinancing to raise funds for the down payment of a new property. If you are searching for a property across different neighbourhoods, go to Spacious to discover a wealth of properties listed for sale.
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FAQ
How do I compare different banks’ mortgage plans?
Instead of just looking at the actual interest rates, you also need to consider whether the bank offers cash rebates. It also depends on the economic environment to decide whether to choose a Prime-based Plan or an HIBOR-based Plan.
How does the penalty period affect mortgage refinancing?
Sometimes, a seemingly cost-effective plan may have a longer penalty period. During the penalty period, be aware that even if other banks offer more promotions, homeowners still have to endure the high interest rates of the original mortgage.
