Hong Kong currency defense kills fixed-rate mortgage market

BUSINESS / Markets

Hong Kong currency defense kills fixed-rate mortgage market

Apartment buildings stand in Discovery Bay, a residential project developed by Hong Kong Resort Co., on Lantau Island in Hong Kong, China, on March 27. Private homes in Discovery Bay currently sell from about HK$8 million to HK$80 million, said Denis Ma, head of research for Hong Kong at real-estate services company Jones Lang LaSalle Ltd. | BLOOMBERG

Bloomberg

Apr 20, 2018

HONG KONG – Hong Kong’s banks, blindsided by rising funding costs due to the city’s costly defense of its currency peg, are clamping down on popular fixed-rate mortgages.

Bank of East Asia Ltd. is no longer accepting applications for these home loans “due to recent movements in interest rates,” the lender said in an emailed reply on Friday, more than two months before it had originally planned to end the program.

Industrial & Commercial Bank of China (Asia) Ltd. will stop from May 1. Bigger rivals HSBC Holdings Plc and BOC Hong Kong (Holdings) Ltd. stopped offering fixed-rate mortgages last month.