The Fed announced a rate cut of 0.25 per cent
It was originally good news for the property market. However, due to the recent violent demonstrations in Hong Kong and the Sino-US trade war, most of the real estate reaction yesterday was conservative. The impact of this interest rate cut on the property market in Hong Kong is greater than the actual situation. It also means that Hong Kong may be affected by the interest rate cuts and the deterioration of the external economy. It is not appropriate to be overly optimistic about the market outlook. The industry also expects that Hong Kong banks will not follow the US interest rate cuts in the short term. It is estimated that the United States will continue to reduce Hong Kong by 1%. The actual interest rate in Hong Kong will remain between 2 and 2.5%.
According to Cao Deming, Senior Vice President of Meridian Mortgage, the second quarter GDP of the United States rose by 2.1% quarter-on-quarter, higher than the market expectation of 1.8%. This shows that the economy has not shown signs of sharply weakening. Therefore, it only cuts interest rates by 2.25 percent. The interest rate cut is less than the 0.5% expected by some market participants. It is believed that in the second half of the year, the Fed will closely monitor the impact of interest rate cuts, the Sino-US trade war and the trend of various economic data, and then decide the pace of interest rate cuts. It is expected that the United States will have a greater chance of not reducing or reducing once again during the year.
Hong Kong and the United States spread narrowed to help attract capital
As for the pace of interest rate cuts in Hong Kong, Cao Deming expects that Hong Kong Bank will lower the prime rate (P) opportunity during the year. It is expected that the actual new interest rate will remain between 2 and 2.5%. I believe that if the United States has to cut interest rates by 1% or more, Hong Kong will have the opportunity to follow the adjustment of the best interest rate. He also pointed out that since the start of the US interest rate hike cycle, the spread of Hong Kong and the United States has been widening, which has become one of the reasons for the outflow of funds from Hong Kong. If the US cuts interest rates and Hong Kong does not follow, it will help narrow the interest rate gap between Hong Kong and the United States. Return to Hong Kong.
Internal and external political and economic factors affect the property market
Although interest rate cuts are regarded as one of the important factors for the property market and the mortgage market, the Sino-US trade war, the resumption of Brexit in the UK, and the unstable performance of many US economic data have become one of the external uncertainties, plus local politics. The incident remains unresolved. In the long run, it will depend on whether domestic and foreign political and economic factors will seriously affect the development of the Hong Kong property market. He expected that the price of the property within the year will be within 5% of last year.
Worried around the periphery dragged down the port
Huang Yixin, managing director of the Lijiage Mortgage Agency, also pointed out that although Hong Kong banks have not followed the US interest rate cuts, the market has generally believed that the Hong Kong interest rate hike cycle has not ended, meaning that the low interest rate environment for more than 11 years will continue. It is expected that for the property market, the psychological impact is greater than the actual situation. Since the interest rate cut also means that the external economy is worse, Hong Kong may be affected and should not be overly optimistic. Mr Wong reminded that although the low interest rate environment in Hong Kong continued, as the interest rate continued to be high, the bank’s capital cost increased, and the profit on the mortgage business decreased. It is not excluded that if the one-month interest rate is more than 2% for a long time, the bank will cut it again. Mortgage product offers and cash rebates may even increase interest rates. Prospective purchasers and those who intend to change their flats should pay close attention to the latest terms of the bank’s announcement. Don’t think that Hong Kong must be taken lightly because of the US interest rate cut.
Social conflicts affect market sentiment
Chen Haichao, head of research and development at Lijiage Real Estate, said that the short-term impact of the US interest rate cut on the Hong Kong property market is not significant. As the market has long anticipated, the US interest rate cut will only release Hong Kong’s long-term low interest rate environment, which is good for the long-term property market. Role, but the short-term will not prompt more prospective buyers to enter the market, because prospective buyers and owners are more concerned about the impact of social conflicts, which directly affects their sentiment and decisions.