PDF《本港主要银行加息0.125厘》

s announcement to raise the target range for the federal funds rate by

25 basis points(bps). Commercial banks in Hong Kong fol- lowed the interest rate hike soon after, and have raised their interest rates for the first time in

12 years, with the in- crease in rates ranging from 12.5bps to 25bps, signalling the arrival of a rate-hike cycle. Although the big players in Hong Kong only raised their interest rates by 0.125 percentage points, which was smaller than expected, it is widely believed to be only the beginning of another interest rate hike cycle. The rate-hikes are very likely to continue throughout the remainder of this year and into next year. As the current rate-hike cycle coincides with a series of risk factors such as historical high home prices in Hong Kong, capital outflow in emerging markets, and an ongoing trade war between the United States and China, enterprises and the public must reflect on our position seriously and en- sure proper risk management. The gov- ernment should also be prepared for the impact brought by this rate-hike cycle, and provide the necessary help to busi- nesses in times of need. In line with market expectations, the Fed lifted the target range for the federal funds rate by a quarter percentage point to

2 percent to 2.25 percent. This was the Fed'

s third move in 2018, and the eighth since it began its rate hikes in 2015. Along with the interest rate hikes, the Fed also rolled out the balance sheet reduction program in

2015 in an at- tempt to steer away from its super-easy monetary policy, which had been in place since the financial crisis in 2008. Moreover, the Fed has also removed a sentence from its post-meeting statement that had stated that monetary policy remains accommodative. , further sparking speculation regarding further rate-hikes in the future. As the majority of Fed officials expect another rate hike at the end of the year, borrowing what the Financial Secretary Paul Chan Mo-po has said, Hong Kong'

s long-maintained super low interest rate environment may soon end, and more rate-hikes are likely to come. . Although banks in Hong Kong had not lifted their prime lending rates for

12 years up until now, the impact of America'

s tightening monetary policy has surfaced in the market for quite some time already. For instance, the Hong Kong interbank offered rate(HI- BOR) has reacted to US rate-hikes as soon as in early 2018, before rippling to local deposit rates and loan rates. One-month HIBOR has also gone up from 0.4 per cent in

2017 to the recent 2.2 per cent. In addition, most banks have long raised their time deposit rates as well as mortgage rates. Undoubtedly, Hong Kong'

s economic fundamentals are resilient. The normalisation of in- terest rates would be conducive to a healthier property market and beneficial to the sustainable development of Hong Kong'

s economy. However, the rate hike would surely increase homeowners'

burden, and put pressure on the stock market and the property market. According to the 12.5bps increase by most banks, the impact on borrowers is insignificant, as they are paying an extra HK$65 a month for every HK$1 million of mortgage assuming the mortgage pe- riod is

30 years. But if the rate-hike gradually accumulates to

1 per cent where the actual mortgage rate would become 3.35 per cent, the monthly re- payment would go up 13.75 per cent to HK$533, while the total interest would increase by a staggering

49 per cent. As the local property market is on a his- torical high, developers of many first-sale properties have offered mortgage loans with higher loan-to-value ratio to attract first-time homebuyers. Th........