Big bank interest rate abacus hides future added risk

Hong Kong banks ended up with the best lending rate (P) yesterday, but the big banks did not raise interest rates by a quarter of a percentage point with the Reserve Bank, while only a one-eighth of the increase was made in Hong Kong. Large banks have their own abacus, but this pushes up the risk of future volatility and brings greater shock to the market.

The cost of funds varies from interest rate to interest rate.

The Reserve Bureau raised interest rates by a quarter of a percentage point yesterday. The response of the banks in Hong Kong was both expected and unexpected. What is expected is that the best interest rate has finally been raised. The Reserve Bank raised interest rates seven times a total of 1.75%. Although the best interest rate in Hong Kong did not move, the funds flowing in during the volume period began to withdraw with the receipt of water from the Reserve Bureau, resulting in a balance of the banking system of about HK$180 billion in March this year. The urgency has dropped to about $76 billion. This has not only caused the interest rate to continue to rise. The banks have also sneaked in interest or added interest rates, indicating that the most favorable interest rate is inevitable.

To the market and the Hong Kong Government, it is the big banks that only add the best interest rate and one-eighth of the interest rate. On the surface, in the interest rate cut cycle, banks in Hong Kong can’t follow the Fed’s interest rate cuts when the interest rate drops to zero. It has accumulated a decrease of 2%. The Reserve Bureau added a total of 2% to the 8th interest rate increase yesterday morning. If we look at this figure alone, banks in Hong Kong may not add or add less.

The actual situation is of course much more complicated. The funds mentioned above are returned to the United States, which reduces the flooding of Hong Kong and the consideration of competing businesses between banks. Large banks have a large number of depositors. For the time being, they can increase the cost of capital. They can control the increase in the cost of capital. When the interest rate is increased, the profit will be higher. The loan based on P will also raise interest rates by a quarter. Small and medium-sized banks have increased their relative competitiveness.

As for the small and medium-sized banks to add a quarter of the total to the Bureau of Reserves, the funds are mainly from the borrowing market, and the cost of capital has risen.

The actual situation is complicated, the addition is not impossible.

Large banks have a small interest rate hike. For lenders, including flats, it is of course a good thing, and the interest burden can be increased. However, for the asset market, especially the property market, the risk of greater volatility in the future may rise.

This is because the normalization of interest rates in Hong Kong is inevitable, interest rates will still rise, and will the future increase be only with the Fed, and will not be added or overcharged? In fact, it is difficult to predict. For example, if international funds continue to raise interest rates and reduce debts, and they are moving away from emerging markets, Hong Kong is regarded as an Asian “cash machine” because of the free flow of funds. It cannot be ruled out that huge funds will be withdrawn urgently. The added interest rate will probably have to be added, which may have a major impact on the asset market in Hong Kong.

As the property market in Hong Kong is at a historically high level, it still does not reflect the unfavorable factors. Young home buyers have not experienced any interest rate hikes. Whether financial preparation is sufficient and not excessively optimistic, if the interest rate continues to rise, it will increase and increase, which will result in the property market. A bigger test.