Led by HSBC, Hong Kong’s major banks cut their prime lending rates – to a historic low of 5 per cent in some cases – on Thursday, further reducing funding costs to help reboot the city’s businesses and reduce the burden on mortgage borrowers.
The Hong Kong Monetary Authority (HKMA) cut the base rate by a quarter point to 4.25 per cent on Thursday morning, hours after the US Federal Reserve pared its target rate by the same margin to a range of 3.75 per cent to 4 per cent during the seventh meeting of the Federal Open Market Committee (FOMC) this year. The new base rate is the lowest for Hong Kong since November 2022.
HSBC and its subsidiary Hang Seng Bank, alongside Bank of China (Hong Kong), trimmed their prime lending rate by 12.5 basis points to a historic low of 5 per cent, they said in separate statements on Thursday.
Standard Chartered and Bank of East Asia cut their prime lending rate by the same margin to 5.25 per cent. All five banks reduced their savings rate by 12.4 basis points to 0.001 per cent. Only customers with deposits above HK$5,000 (US$643) earn the rate, while those with less continue to earn no interest.
HSBC and Hang Seng Bank’s new rates will start on Friday, while BOCHK, Standard Chartered and Bank of East Asia will change theirs from Monday. Hong Kong’s prime rate last stood at 5 per cent in September 2022.
This marked the second rate cut in six weeks for the lenders, after a 12.5-basis-point reduction in September. The city’s other banks are expected to follow suit later on Thursday.
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