Thanks for this. To sum up what I wrote in the other thread, there is around an 80% chance that US will raise interest rates for the first time since 2006 next Wednesday and I believe with the HKD pegged to the USD this will have an immediate and direct effect on HK rates on Thursday. I think if US raises 0.25%, then HK will raise 0.25% at the same time.
But now I am thinking what are the differences between prime and hibor mortgages in Hong Kong. I happen to be on a Hibor + 0.7% deal which is a fantastic and effectively means I have been paying between 0.9% and 0.95% interest every month for the last 6 years, as your graph illustrates. But for the first time ever this month, my rate is 0.89%, the lowest I have every experienced over the last 6 years. I thought rates were going up, not down? So whats going on with the hibor rate these days and why is it lower than ever when I have been bracing for it to shoot up?
So just to speculate, if US raises next week as expected, then those in Hong Kong that have prime based mortgages (the vast majority of people) are going to see rate increases basically pegged with this, whereas those with Hibor based mortgages are 'de-pegged' and no idea whats really going to happen. Is it time now for those on prime mortgages to consider switching to hibor if its possible as part of their mortgage package?
The other point I speculated about is that I think as soon as rates rise, property prices in HK are going to fall off a cliff. They are already teetering at the edge now and coming down a bit, but this rate rise is probably going to be what pushes it over the edge and I predict a larger drop than any of the cooling measures (foreigner stamp duty, etc) the govt has tried to introduce over the last 6 years. I am bracing for quite a nasty fall. I could be wrong, and I hope so because I'm an owner and want prices to rise forever, however all signs point to a large fall just around the corner. I would sell now if I didn't need somewhere to sleep. Maybe I could sell and sleep in McDonald's every night?