Like Tree3Likes

HIBOR / Prime mixed mortgage?

Closed Thread
Page 2 of 2 FirstFirst 1 2
  1. #11

    Join Date
    May 2007
    Posts
    599

    Of course, but if you are comparing a HIBOR mortgage to a Prime based mortgage, you are still comparing apples to apples:

    Your Prime based mortage is P-3.15%
    Just say HIBOR goes above P-3.15%, and the cap is activated then you're paying P-3%. WHich is 0.15% more than your prime based mortgage.

    So yes the cap is a moveable feast, but so is your prime based mortage.


  2. #12

    Join Date
    Oct 2007
    Posts
    1,901

    So, why do people get Prime mortgages anyway?

    I don't get what the purpose of this 'prime' rate is. At least, HIBOR is sort of a market rate. If the bank can adjust the prime rate, too, then what are the benefits for the customer to go for a P-X mortgage?

    By the way, the HIBOR of what tenor is used in the calculation of the HIBOR+X annual interests? Hang Seng lists anything from overnight to 12 months.


  3. #13

    Join Date
    Feb 2009
    Location
    Gulf Region, ex Mid-Levels
    Posts
    1,933
    Quote Originally Posted by er2:
    By the way, the HIBOR of what tenor is used in the calculation of the HIBOR+X annual interests? Hang Seng lists anything from overnight to 12 months.
    Monthly as your payments are monthly. The rate gets fixed at the start of each interest period.
    er2 likes this.

  4. #14

    Join Date
    Oct 2007
    Posts
    1,901

    Thanks fth. So the aforementioned Citibank offer basically means (currently) 1.1% mortgage interests?

    Is this Prime rate some sort of economic concept or just marketing slang?


  5. #15

    Join Date
    Feb 2009
    Location
    Gulf Region, ex Mid-Levels
    Posts
    1,933
    Quote Originally Posted by er2:
    Is this Prime rate some sort of economic concept or just marketing slang?
    Just a bad import from the US, its a relatively meaningless number which used to indicate the lending rate to favoured customers set by a bank itself. In Hong Kong as the mortgage is Prime minus, clearly there are better customers out there than their "favoured" ones.

  6. #16

    Join Date
    May 2007
    Posts
    599

    Citibank told me their HIBOR rate at the moment is around 0.24%, so added up, the rate is 0.94%.


  7. #17

    Join Date
    Jul 2006
    Posts
    394

    There is no "their" HIBOR rate, there is only one HIBOR rate.
    http://www.bloomberg.com/apps/quote?ticker=HIHD01M:IND


  8. #18

    Join Date
    Jul 2005
    Location
    HK
    Posts
    307
    Quote Originally Posted by chimo:
    There is no "their" HIBOR rate, there is only one HIBOR rate.
    HIHD01M: HIBOR 1 Month Summary - Bloomberg
    Not true. There is the Interbank's Hibor rate, but individual banks themselves can have their own Hibor which they apply to their mortgage lending. I know for sure that both HSBC and Hang Seng do (have their own), with Hang Seng updating this info daily on their website.

  9. #19

    Join Date
    Feb 2009
    Posts
    8,302

    The official HIBOR rate is published daily by the HK Association of Banks.
    The Hong Kong Association of Banks

    er2, to answer your question, people dont get Prime loans anymore. The overwhelming majority of loans are now H based. But for the mainstream, they are quite a new concept. In fact, HSBC only started offering H loans earlier this year. Before that, you had to go to another bank and HSBC were losing a lot of market share. As soon as they started offering H loans, they became the No1 lender and H loans became the norm and not considered a risky or exotic product anymore.

    With the cap, along with some banks allowing you to switch to P for free at anytime, there is absolutely no reason to get a P loan right now. The effective interest rates are less than half with the H loan.

    er2 likes this.