In "Hong Kong Property," Centaline Mortgage expects that the actual mortgage interest rate in Hong Kong will hover around 3.25% for a period of time, estimating that the interbank offered rate will decline within the year

The Federal Reserve announced the results of its first interest rate meeting in 2026 early this morning, maintaining the federal funds rate at 3.5% to 3.75%, in line with market expectations. The benchmark HSBC announced that it would keep its prime rate unchanged at 5%, and other banks are expected to follow suit. Wang Meifeng, Managing Director of Centaline Mortgage, stated that the local prime rate P has returned to the lowest level before the rate hike, and the general savings interest rate has also returned to zero. Banks will not unilaterally reduce P, and it is believed that the period of P reduction has been completed. It is expected that this year's prime rate P will remain at the current lowest level, and although P remains unchanged, the Hong Kong dollar HIBOR may have the opportunity to decline within the year.

She pointed out that a new Federal Reserve Chairman will take office in May, and it is worth noting whether the successor will promote a continuation of more accommodative policies and further rate cuts. However, it is expected that there is still room for a reduction in U.S. interest rates this year, and continued declines in U.S. interest rates will benefit the further decline of local HIBOR. Although the pace of HIBOR decline is expected to be moderate, the actual mortgage interest rates, mainly based on H, will remain at the capped interest level of 3.25% for some time. However, the decline in HIBOR within the year will help banks alleviate funding costs. During this positive period for the property market, the decline in HIBOR will help promote banks to increase mortgage discounts.

She noted that with the interest rate unchanged, the current mortgage interest rate mainly remains at 3.25%, which has accumulated a decline of 0.875% from the 4.125% before the rate cut cycle in September 2024. The current level is already below the 30-year average mortgage interest rate (approximately 3.78%), with a monthly payment reduction of 10%. For property buyers and mortgage payers, the burden of mortgage payments has been significantly alleviated. According to the current market H mortgage plan (H+1.3%; capped interest P-1.75% P:5%), if the 1-month HIBOR falls below 1.95%, the mortgage interest rate will drop below the capped interest and decrease further.

She indicated that the U.S. restarted rate cuts in September last year, with a total of three cuts by the end of the year. The 1-month HIBOR in Hong Kong dropped from an average of 3.5% in October last year to a temporary average of 2.78% in January this year, and today (29th) it is 2.65%. The Hong Kong dollar HIBOR has declined, but there is still a distance from 1.95%. Unless there is a change in the flow of funds in Hong Kong, it will be necessary to wait for U.S. interest rates to decline to further promote the decline of Hong Kong dollar HIBOR